While a reduced property tax rate could slightly lower mortgage payments, it would not represent enough of a change to make homeownership more accessible.
Backers of the so-called “Renew Baltimore” plan to slash and cap the city’s property tax rate could use a dose of reality. They have constructed a tower of unrealistic promises based on misleading statistics. There are certainly steps we can take to strengthen Baltimore’s economy, but the first is to reject this deeply unserious proposal.
The plan’s first flaw: tax rates alone tell an oversimplified story. In context, Baltimore taxes are already in line with other Maryland jurisdictions. Statewide, local taxes averaged $3,252 per capita in the fiscal year 2022. In Baltimore City, that number was $3,288, only 1% higher. Seven other counties — home to 1.7 million Marylanders — levy higher total local taxes per capita.
Moreover, slashing property taxes would not make the city more affordable for families or businesses. While a reduced property tax rate could slightly lower mortgage payments, it would not represent enough of a change to make homeownership more accessible. And, if property values increased as proponents claim, mortgage payments would instead go up. In addition, local property taxes account for less than 1% of businesses’ total costs nationwide. Even a steep tax cut will have little
impact on the bottom line.
Meanwhile, slashing property taxes will make painful service cuts unavoidable. According to the city’s nonpartisan budget office, the proposal would ultimately cost more than $600 million per year. It would reduce general fund revenues by 23% and quadruple projected deficits.
The resulting budget cuts would hit a broad swath of city services. Here is a sampling of likely cuts, according to city analysts:
Public safety would suffer. We would have to lay off 400 firefighters and 125 EMTs and end the Safe Streets violence prevention program.
Sanitation would take a hit. There would be no more street or alley cleaning, and recycling collection would permanently return to a biweekly schedule.
Public health would deteriorate. The city would be forced to cut down on school nurses, end prenatal health visits and discontinue Healthy Homes lead exposure visits.
Baltimore’s youth would have fewer opportunities. The tax cuts would eliminate 2,000 Youth Works job slots, one-third of neighborhood libraries and all after-school programming.
The plan’s backers promise it will spur enough growth to make service cuts unnecessary. This claim is completely detached from reality. According to nonpartisan city analysts, Baltimore would have to gain 325,000 new residents and more than 8,000 new businesses in just seven years for the plan to pay for itself — an increase of 57%.
Only 1% of counties nationwide have experienced growth spurts this rapid in the last 25 years. None have done so from an initial population exceeding 500,000.
Even this wildly unrealistic scenario would strain the city budget. More residents and businesses mean more children in schools, more tires on roads and more trash to collect.
Tellingly, the campaign’s backers have not published their own estimates of how much growth they expect the plan to generate, how much revenue that growth would bring in or how much city services would need to increase as a result. If they did, it would make clear how unrealistic their promises are.
In reality, drastic service cuts would make Baltimore dirtier, more dangerous and less attractive – a recipe for economic stagnation.
Economic obstacles like this prompted business leaders in Wicomico County to call for loosening or sunsetting the local tax cap in 2018.
Property tax caps are also part of our country’s history of laws that held back Black Americans and other people of color. In the 19th century, resurgent white politicians enacted property tax caps to undermine Black political power in the South. In 1981, Lee Atwater infamously articulated the role of tax cuts in camouflaging the racist backlash to Civil Rights era reforms. Today, the “Renew Baltimore” proposal would force drastic service cuts on a majority-Black city while delivering the greatest benefits to disproportionately white, wealthy landowners.
There are better, more sustainable ways to make Baltimore more affordable. For example, we can use targeted tax credits to assist families getting by on low incomes. Or we could double the city’s affordable housing investments for one-sixth the cost of the tax cut measure.
These positive steps require an effective revenue system. Slashing tax rates and tying policymakers’ hands would do the opposite and would ultimately dim Baltimore’s future.
Christopher Meyer is a Research Analyst with the Maryland Center on Economic Policy and co-author of a recently published analysis of the proposed ballot measure. His email is cmeyer@mdeconomy.org
