Lower Property Taxes, Increased Revenue

Government entities have a revenue mix with a variety of revenue sources. Property taxes are the number one source of revenue for Baltimore City, but they do not need to be. There may have been a time in which a rate of 2.248% was warranted: when the population was larger with a greater demand to live here and the tax was not such a large portion of both individual and business incomes. Unfortunately, we are the second-largest city in the country when it comes to population loss. One of the contributing factors is that our property tax rates are two or more times those of other jurisdictions. See chart with property tax rate comparison for jurisdictions of Maryland. This issue deeply affects people of all incomes. Even if you rent, these taxes are still passed onto you. When you purchase a good or service in the City, part of that tax is passed onto you so that businesses can cover that tax cost and still earn a profit.


Baltimore only relies upon this source for 30 percent of its total revenue, which means Baltimore City is not as reliant on those property taxes as many would think, given how high the rate is. The majority of the other revenue sources are driven by population. Therefore, Baltimore City should adopt policies which increase population, driving revenue by incrementally reducing the property tax rate from 2.248 to 1.25 percent over ten years. There will be minimal shortfalls to property tax revenue year after year while maintaining a rate higher than any rate around Baltimore City, specifically Baltimore County. This decrease in property taxes will encourage people and businesses to come to Baltimore and stay, thereby driving all of our other sources of revenue.


The second largest source of revenue is the state income piggyback tax from the state income taxes. When an individual completes their MW507 State Tax Form for their employer, stating they live in a specific jurisdiction, in our case, the City, a portion of that state tax money goes to that jurisdiction. That aggregate amount of income taxes is a product of population. If we focus on policies that increase business and population in Baltimore City and encourage sustained long-term residence in Baltimore, this amount, the state income piggyback taxes, should be the most significant revenue stream. There are also 18 other sources of revenue that are underutilized. Our government needs to prioritize maximizing these other sources in a manner that is equitable to all populations within the city. The incremental growth of each of the other sources of revenue as a percentage increase from the previous year is what the City should target. This should be equal to the incremental decrease of the property tax rate as a percentage decrease from the previous year, but divided by nineteen, because that is how many other sources of revenue there are, including the state income piggyback tax.


Ex/ (0.02248 – 0.0215)



Here, I am proposing that the property tax rate decrease for the first year goes down from 2.248% to 2.15%. The rate at which we would then have to increase the remaining revenue sources is represented by this formula for the first year: only a 0.294% increase. This is manageable, but we need people in the City government who know how to accomplish this. As a CPA, I have the skills, experience and knowledge to guide these complicated decisions. Here is a list of each form of revenue, from largest to smallest.


1. Property Taxes (Only 30% of total City revenue)

2. Income Tax (State Piggyback Tax), a product of population which grows as we attract businesses and people to the City. The aggregate amount would increase if we had more people. Increasing population should be central to our City’s policy as we are losing more and more people and therefore revenue from this category each year.

3. Highway User Revenues 

4. State Aid and Grants

5. Federal Aid and Grants

6. Recordation & Transfer Taxes – There are both State and local jurisdiction taxes; however, Baltimore also has high City Recordation and Transfer Taxes (1.5%). If you are a first-time homebuyer, you often split these 50/50 with the seller as a negotiable tool, but only the Maryland ones are exempt. Title and Real Estate Agents want to see these rates go down over time. In addition, the volume of transactions will go up as we decrease property taxes, so we can actually afford to decrease this rate as well.

7. Energy Tax 

8. Telecommunication Tax 

9. Net Hotel Tax 

10. Earnings on Investments 

11. Traffic Cameras (increase these but only for the purposes of funding synchronized traffic lights and traffic-calming measures vs. police overtime; also, leads to less interaction with police)

12. Net Parking Revenues

13. Enterprise fund contributions for City services

14. Video Lottery Terminals

15. Sanitation and waste removal related revenues

16. Convention Center event revenue

17. Admissions & Amusement Tax 

18. Other Charges for Services 

19. Other Grants and Contributions

20. Other Miscellaneous Revenue and Special Purpose Funds


We need smaller, incremental changes over a longer period of time to allow for other forms of revenue to catch up, avoiding shortfalls. This is why I do not support the Renew Baltimore referendum, it will cut revenue too drastically. My proposal is a 0.1% rate reduction each year over ten years. My fellow Democrats are squeamish when they hear tax cuts. We think of regressive federal tax cuts that Republicans enacted while increasing deficit spending. As a CPA who has studied Tax Policy but who is a Progressive Democrat, I will be the leader who molds consensus. 2.248% is too high. It hurts people of all incomes. It impacts rents and prices. Baltimore County is 1.1%. The other jurisdictions surrounding us are even lower. I will seek a reduction from 2.248% to 1.25%, so it will still be the highest rate. As the rate decreases, we need to increase other forms of revenue. Most are products of population, so if we focus on policies to reverse population decline, revenue can increase. Our second-highest source is the State Income Piggyback Tax, and if we have more people living here, it could be the number one source, but if we address vacant properties and PILOTs, that is additional revenue.


I want to reverse the population decline, which threatens our financial sustainability. Decrease property taxes to comparable rates. We will need to extend additional property tax credits to seniors living on fixed incomes, all veterans, not just veterans declared 100% disabled, as well as active duty military. This would bring in more federal dollars while attracting the best citizens our country has. We have the Coast Guard, but we also have Edgewood and Aberdeen Proving Grounds to the north, Fort Meade to the south, and Martin’s to the east. We want our seniors to be able to afford to live here. This can provide stability with households that only have one income and cannot support daycare. To get the best workers, fill vacancies, and encourage them to live here, offer incentives for all City employees, not just police, firefighters, and teachers. To promote the arts, have incentives for live music twelve times per year or art galleries and shows four times per year. To encourage business owners to live here and hire City residents, having a compounding effect to increase City revenue, have a tiered incentive for employing 5, 10, and 20 City residents (FTEs) to be used towards residential property.

To reduce the 15,000 vacant properties in Baltimore, we need to be able to implement a vacant property tax that is ten times the regular property tax rate. But, we still need to execute Environmental Fines and Inspections that will be proportionately more as a percentage of value of the properties that have such low values. This will help accelerate the sale and development of properties. Next, create a Land Bank that allows for the acquisition of land or property that has been vacant for three years. A three-year grace period to be developed and sold is a reasonable time, but the Land Bank would first target areas that have higher concentrations of vacants and then prioritize properties by how long they have been vacant. If possible, turn some of these properties over to Habitat for Humanity, which has been a great partner for the City. Finally, the Land Bank can also go to the communities to help determine what is needed there and ensure that the properties are converted into something that will meet those needs: grocery stores, daycares and PreK options, playgrounds and parks, etc.


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