Like the property tax relief proposal released last week by the fundraising frontrunner in the Baltimore mayoral race, the plan being unveiled today by challenger Otis Rolley stretches over a decade.
One big difference: Rolley promises a 50% reduction over 10 years. Mayor Stephanie Rawlings-Blake’s strategy calls for a 9% reduction over nine.
Rolley, the former city Planning Department chief, has been promising to halve property taxes, saying dramatic cuts are needed to bring Baltimore City’s tax rate in line with that of neighboring counties, attract new residents and beef up the city’s tax base.
But today’s announcement is the first time Rolley has offered details to show how he would make good on a campaign pledge that Rawlings-Blake has been dismissing as “pie in the sky” and “grandiose fantasy plans.”
Key features of Rolley’s proposal include a two-tiered approach and making up the lost revenue with greater efficiency in government spending and a tax on vacant and blighted property. Rolley was asked if these sources of income could really compensate for such major tax slashing.
“They’re not such a big if,” Rolley told The Brew. “What’s a real gamble is continuing to do things the way we have always done them around here. That’s more than a gamble, it’s ensuring that we are going to continue to shrink and being bankrupt, eventually.”
Tax Relief Greater for Lower-Priced Homes
Under Rolley’s plan, every primary residence gets tax reduction, but the 10-year goal for lower-priced residences is more ambitious than the goal for higher-priced dwellings. This is how the two-tiers are configured, according to a draft version of the plan released this morning.
• a 1.1% target rate on the first $200,000 of assessed value. (There are 124,026 property accounts listed as principal residences; at this rate, there will be approximately $180 million in taxes assessed.)
• a 1.75% target rate on value above $200,000. (There are 90,216 property accounts listed as principal residences; at this rate, there will be approximately $60 million in taxes assessed.)
As a result of the tiered structure, Rolley says, revenues would drop to 75% of current levels.
How would the candidate make up for a 25% loss in revenue? In part by imposing taxes and fees on vacant and blighted properties. (This idea was first proposed by another mayoral candidate, Joseph T. “Jody” Landers, based on a taxing strategy used in Washington, D.C., to encourage vacant houses to be sold or rehabilitated.)
Rolley would tax non-blighted vacant land at the current tax rate of 2.268%, or $2.268 per $100 of assessed valuation.
Blighted vacant lots would be taxed at 5% ($5 per $100 of assessed valuation) and blighted structures would be taxed at 10%.
Rolley was asked if this idea could produce enough revenue, given the likelihood of a lengthy enforcement process involving absentee landlords and litigious property owners.
“If that has been a problem here, a lot of that is around the issue of incompetency and the willpower and leadership we have not had,” he said, adding there are ample opportunities to make the city’s “bloated government” more effective.
And to make the tax system more efficient, he proposes a census of all city property to assess its condition, use and tax status. As mayor, he said, he would also step up housing code enforcement.
Tax Relief Begins in Third Year
To give these strategies time to work, Rolley will begin the annual 14.6¢ rate reduction in the third year, or tax year 2014-15.
A draft of his plan lays out what rate reduction would look like for a family owning a $200,000 home in Baltimore. Today, the property tax is $4,536 a year. In the third year of Rolley’s plan, the tax would drop to $4,244. By the seventh year to $3,076. By tax year 2021-22, it would be $2,200.
Other strategies to boost the city’s dwindling population (Baltimore lost more than 30,000 people in the last decade) must be employed as well. “Unless we grow, the city we fail,” Rolley said. “And I know there is no ‘silver bullet.’”
He has also released plans to improve education and combat crime. His proposals to increase transparency and accountability in city government would save the city money, although his plan doesn’t cite any specific budget cuts.
But he said improving the delivery of government services, along with the tax cuts, reductions in blight and all his other initiatives “will make neighborhoods stronger and the city as a whole more attractive.”
One of the most unique features of his plan is a property tax abatement for improvements on offices or hotels that convert to condos or primary residences. Builders and subsequent unit owners would still have to pay property taxes on the old value of the property (at the reduced rates of his tax plan), but the improvement would be tax-free until 2022-23.
This idea is modeled on a Philadelphia program that Rolley said has helped generate $4 billion in construction activity over a 10-year period and created hundreds of millions of dollars of “market spillover” in the city.