Let’s say you?re a city. A city with a lot of crime and poverty and high taxes ? and a population that has been shrinking for years. What medicine would be the best remedy for your problems? Recruiting more businesses? Yes. But not just any kind of business.
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Private sector businesses paying property and corporate taxes that fund roads and schools and city services for those who cannot or will not take care of themselves are the best option. They don?t just pay for themselves, they allow the city to invest in itself and its people.
But those are not the enterprisesBaltimore is attracting. A study released earlier this week from Johns Hopkins University Center for Civil Society Studies shows nonprofits employ 30 percent of the private sector work force in the city. That?s about three times more than the average for the rest of the state. Overall, the study shows that nonprofit employment grew twice as fast as private sector employment from 1995 to 2005 throughout Maryland, largely due to hiring at medical institutions.
Mayor Sheila Dixon?s office has not responded to multiple requests to estimate how much the city spends for services for nonprofits, including religious organizations, versus how much it receives from them through the energy tax and telecommunications tax and other payments.
But what?s clear is that the receivables in no way match the amount those nonprofits owning property would pay in property taxes. Since 26 percent, $9 billion, of city property is exempt ? again, way higher than the rest of the state ? this means the rest of us must shoulder the burden.
Remedies exist to fix the cycle of high taxation. But it means a radical departure from current policy. For starters, the city must publish in an easily accessible way on the Web an estimate of how much nonprofits contribute for city services and how much the city spends to provide services for them. That would help to start a conversation about how to bridge the difference — which should include higher payments from nonprofits, at least on a temporary basis. Earlier this fall, Gov. Martin O?Malley said a legislative solution may be under consideration. So it would behoove nonprofits to act before the legislature acts for them.
The second piece is slashing property taxes in half to match those of surrounding jurisdictions. Done over five to 10 years, in tandem with higher payments from nonprofits, this method would mitigate the impact of lower tax rates. And over time, it would generate a surge in revenue for the city as new businesses and residents moved in. That would allow the city to eliminate extra payments from nonprofits.
Every other method the city has tried to attract new residents has failed. As a previous Examiner analysis showed, it has cost the city and private developers about $4 million per person to attract the extra 897 people who moved here in the most recent Census analysis.
Unless Dixon wants to pay millions for each new resident, she?ll lobby the City Council and local nonprofits to remove the real barriers to growth.
