City Councilman Carl Stokes proposed a charter amendment and ordinance at City Hall this week that he asserts would lower the city’s property tax rate by 50 percent over five years. It garnered little support from fellow Council members.
The plan would reduce property taxes by 15 cents a year until it reaches $1.10 per $100 of assessed value in fiscal year 2017, resulting in the same tax rate as Baltimore County, Stokes said at a press conference prior to a March 7 City Council meeting.
Baltimore City residents pay significantly higher on property taxes than surrounding jurisdictions, a rule that Stokes says drives homebuyers out of the city, scares off potential investors and forces current city homeowners to pay double the taxes on property assessed at lower values than nearby counties.
He said his proposal would “create thousands of new jobs and spur neighborhood revitalization and commercial infrastructure,” but a spokesman for Mayor Stephanie Rawlings-Blake countered that the tax reductions would cost the city $393 million in revenue at a time when it already faces a $81 million shortfall.
At the press briefing, Stokes admitted the city would lose revenue in the plan’s early phases, but said he had 15 suggestions to offset the losses. They included reducing property tax incentives, requiring city residency for city workers, and most contentiously, “popping the cap” on the Homestead Tax Credit.
In supporting documents, the councilman – who is considering a mayoral bid in September – said if the city raised the ceiling on the tax credits from 4 to 10 percent over three years, the extra funds could supplement a reduction in property taxes.
Dr. Linda Loubert, an economics professor at Morgan State University, called Stokes’ plan a “bold move.” At a time when housing markets are rocky, it would be difficult to calculate how increasing the cap would lead to savings, she said in an e-mail.
“If the city loses $100 million in tax revenue, yet gains $80 million with this higher cap, we are still $20 million short and a lot of folks, who might live in a section of the city where home values see a little increase in value, will be quite unhappy with the city for raising their tax amount,” she said.
After unveiling the plan on the City Hall floor, Stokes asked his fellow City Council members to “keep an open mind” about the proposal until “honest and fruitful” debate could commence at a public hearing.
They failed to buy into the plan.
Councilman William Cole IV, who is a member of the Taxation, Finance and Economic Development Committee in which Stokes is chair, said the proposal’s initial phase is funded on the backs of around 30-40 percent of principal homeowners.
“We’re starting the discussion about lowering property taxes … by raising property taxes?” he questioned at the City Council meeting.
Councilman Nicholas D’Adamo brushed off Stokes’ plan. “He’s running for mayor,” he said. “If you believe in the tooth fairy, you’ll believe in his plan. It will never happen.”
Councilman Robert Curran said he would only support the proposal if separate tax brackets were enforced for residents and commercial vendors. He noted that BGE and other major businesses would benefit the most from the property tax reductions.
Stokes initially had Councilman Warren Branch as his sole co-sponsor for the charter amendment and Homestead credit ordinance, but Branch withdrew his support before the city council meeting, saying he needed more information before making a decision.
In a written statement the mayor’s spokesman, Ryan O’Doherty, said, “This plan relies on fuzzy math, ignores the city’s current fiscal problems, and would lead to irresponsible cuts in public safety and other core services while significantly raising taxes on existing City homeowners by virtually eliminating the homestead tax credit.”
Stokes insists the proposal wouldn’t prompt cuts, citing other major cities including San Francisco and Boston who enforced similar plans after mandates to lower their tax rates.
“Both of those cities grew dramatically. Both had surpluses among the millions,” Stokes told reporters. San Francisco lowered their property taxes by 60 percent overnight and Boston by 75 percent over 2 years.
“Why would we be the one city in America that would reverse that rule (of success),” he asked.
One of the mayor’s spokesmen muttered that California had to bail out its municipalities after they enacted the drastic property tax reductions.
Other mayoral candidates have challenged the city’s property tax rate including city planner and former Sheila Dixon chief of staff Otis Rolley.
Stokes said previous attempts by elected officials to reduce the property tax were “just promises.” “There was no political will … It takes political courage to do this.”
“Homeowners are still winners under this program,” he insisted. “The public can determine if it’s worthy or not.”