Baltimore’s brewing tax fight and other budget hearing takeaways

Baltimore tax revenues are increasing. So why can’t it lower property taxes?

That was a query from multiple members of the Baltimore City Council Wednesday as the city began a six-day series of hearings to discuss Mayor Brandon Scott’s $4.9 billion spending plan.

The proposed budget, which must be approved by the council and would begin July 1, calls for an increased focus on the city’s infrastructure while filling a $12 million structural deficit. What is not currently included in the budget is a plan to tweak several city tax credits to offer property tax relief to city homeowners, as initially proposed by the Scott administration.

The first piece of the tax plan, a reduction of the cap on the Homestead Property Tax Credit, stalled in a City Council committee in February. The proposal would make fewer homeowners eligible for the credit and was intended to offset some revenue lost from expanding the city’s Targeted Homeowners Tax Credit.

Collectively, the Scott administration argued the two tweaks would have given modest property tax relief to 65,000 city homeowners while keeping bills neutral for another 10,000.

As talks got underway Wednesday, several members of the all-Democratic council questioned why the city couldn’t just offer relief via the Targeted Homeowners Tax Credit without reducing the other.

Councilman Mark Parker noted that the city hasn’t adjusted the property tax rate since 2020. Since then, property tax revenue has increased by 35%, outpacing inflation, which Parker said was between 25% and 28%.

“I would simply suggest that any time we do see real increases in revenue, not just inflation ... is a good time for us to turn some portion of that into property tax decreases,” he said. “Why not now?”

Bob Cenname, the city’s acting budget director, noted that Baltimore has faced a substantial state-mandated increase in school funding since then. The city’s last comprehensive plan to reduce effective property tax rates, launched in 2012, was also accompanied by new revenue from the Horseshoe Casino, Cenname argued.

Parker suggested offering more modest relief through a smaller adjustment to the Targeted Homeowners Tax Credit.

The city has an “optics issue,” Cenname argued. Baltimore is the only jurisdiction in the region that charges a rate over $2 for every $100 of assessed value.

“Our goal here is to be as aggressive as we can be. If you’re just doing a penny, that’s fine,” he said. “Our residential tax rate with the plan that we proposed would have been under $2 for the first time.”

Baltimore’s property tax rate is currently $2.248 per $100 of assessed value. Residents receiving the targeted credit now pay an effective tax rate — the rate after exemptions, credits or other adjustments — of $2.048. Scott’s plan would reduce that effective rate to $1.99.

When questioned by council members about alternatives, city finance officials said a one-cent reduction in the overall tax rate would cost the city about $5 million in revenue. A one-cent reduction to the effective rate would create a $2 million shortfall, Cenname said.

Councilman Isaac “Yitzy” Schleifer argued that Scott’s plan includes $400 million in new spending compared to the previous year. He questioned why $4 million of that money couldn’t be dedicated to offering two cents of effective tax relief.

City Administrator Faith Leach said the majority of that money was spoken for. About $150 million of the city’s additional operating costs was associated with one-time funding for capital projects. About $16 million was dedicated to increased wages for city laborers, she said, and additional funds were needed to compensate for inflation.

Cenname said the budget includes just $11 million to $12 million of actual enhancements.

Haunted by audits

An audit released last week showing the city has failed to collect millions of dollars in overdue bills was still on the minds of some City Council members.

Council President Zeke Cohen, who presided over the Board of Estimates meeting where the audit was presented, asked city finance officials to present total figures for how much was owed, a question he also posed last week.

After fumbling with paperwork, Finance Director Michael Mocksten arrived at the figures: $15.3 million remains outstanding for fiscal year 2024 while $14.4 million has yet to be paid for fiscal year 2025.

Baltimore residents deserve better, Cohen argued.

“They deserve to know that our system works and every dollar is being collected and spent appropriately,” he said.

Administration officials emphasized that the delinquent amounts represent a small portion of the city’s overall bill collections. Of the bills that contribute to the city’s general fund, such as property taxes, the city has a 98% collection rate, officials said. Bills that were the focus of the audit, including payments in lieu of taxes and rental fees for the city’s conduit system, have a 94% collection rate. Utility bill collection rates are lower.

ICE out, more funding in?

Last year’s final budget agreement boosted funding for the Mayor’s Office of Immigrant Affairs, and some City Council members once again pushed for additional funding amid President Donald Trump’s immigration crackdown.

Councilwoman Odette Ramos, who grew visibly emotional during a Wednesday hearing, called on fellow members to join her request that Scott boost the immigrant affairs office’s proposed $3.4 million budget to $5 million to help cover additional legal, mental health and other social support services for immigrant residents.

“We’re at a time when we can lead,” said Ramos, wearing the small “ICE OUT” pin she has rarely been seen without since the crackdown began last year.

In addition to facilitating language access services across city government, the Mayor’s Office of Immigrant Affairs administers Safe City Baltimore, which facilitates Know Your Rights seminars and provides case management services to families who have had a loved one detained by ICE. Services can include immigration legal screenings and access to group or individual therapy.

Catalina Rodriguez Lima, director of the immigrant affairs office, said that more money “would help us help more people,” but acknowledged that it’s not a panacea while the federal government erects tougher legal barriers or increases the costs of posting bond at an ICE facility.

In some cases, money won’t solve problems if the federal government is blocking due process, she said.

It’s unclear how many Baltimore residents have been detained by ICE, but more than 4,800 have ended up in ICE custody across the state since last January. Councilman Zac Blanchard asked Rodriguez Lima for an estimate of how many more families her office could assist with the additional funds over the next two weeks.