Could a state property tax cap stimulate Baltimore's economy?
Originally published in the Baltimore Sun
When Gov. Larry Hogan announced his rejection of the Red Line, an east-west rail transit line in Baltimore City, he seemed to derail the high hopes of Mayor Stephanie Rawlings-Blake and many other supporters of the $2.9 billion project. "He canceled a project," lamented the mayor, "that would have expanded economic development, created thousands of jobs, increased access to thousands more, and offered residents better health care, child care and educational opportunities."
There can be no doubt that Baltimore's public transportation network needs improvement, but those who advocated the Red Line need not feel disheartened. Governor Hogan shelved a project that had little chance of delivering on its promises, and he now has the opportunity to offer the city a consolation prize — one that provides what we wanted from the Red Line in the first place: economic development and diverse opportunities.
Sure, it was easy to believe that a major new addition to the transit system could have uplifted Baltimore's neighborhoods. When we look at Washington D.C., we see that every time a new Metro station opens, a cascade of development follows. Unfortunately, it doesn't work that way in Baltimore. Consider the stops along Baltimore's existing Light Rail and Metro Subway. In the city, they have mostly failed to stimulate economic activity and elevate surrounding areas. The most disappointing example is Metro's Penn/North Station, which was at the center of the unrest that took place earlier this year.
In Baltimore, we can't maximize the benefits of any public investment in transportation because there are too many obstacles to economically appealing private investment. Among the most significant obstacles are exorbitant property tax rates that are double those in every surrounding county. The suburbs, whose residents want less congestion and sprawl, are financially attractive, while the city, where we are in desperate need of more jobs, services, and residents, is financially repellent. We've got it all backward, and Governor Hogan should help us set it straight.
Baltimore's civic leaders know that they must find a way to permanently lower rates to a level in line with the rest of the state. They affirm this every time they award piecemeal tax breaks and generous subsidies to wealthy, well-connected developers to fix up tiny parts of the city. But our elected officials haven't come up with a more comprehensive and equitable tax structure that provides real relief for all Baltimoreans. The politicians are deathly afraid of the potential short-run hit that the city coffers might take while waiting for economic growth to regenerate the tax base.
Governor Hogan can break this impasse by delivering temporary fiscal assistance from the state. To do so, we need suburban taxpayers — some of whom care nothing for the city — to buy in. Luckily, Governor Hogan is well-positioned to marshal state resources and inspire Marylanders in the counties by offering them protection against higher future property tax rates.
Mr. Hogan should conduct an effort to mandate a statewide cap on all local property tax rates. The state already places legal limits on local income taxes; a similar cap for property taxes could slash Baltimore's property tax rates in half while forcing no county to change its current property tax rates. This solution would guarantee urbanites the permanence of their tax relief while assuring suburbanites that their local taxes will never increase beyond a certain point.
Of course, the state would have to work with the city to engineer a comprehensive plan for overcoming any short-run financial difficulties precipitated by the cap. Perhaps the city could be given a few years to comply. Perhaps the state could assist the city in selling properties (such as abandoned houses that would have value in a friendlier tax climate) and finding other reasonable sources of revenue. The state might even offer direct financial aid for such a worthy initiative, renewing the city for some constituents while protecting others from sprawl and land grabs.
It's a versatile and ambitious plan that could put Baltimore on the right track. But it can only be executed by a skilled leader capable of bringing different groups together for a common cause. If Governor Hogan chooses to be that leader, then even the most ardent Red Line supporters will have no trouble moving forward.
Louis Miserendino is director of the McMullen Scholars Program at Calvert Hall College High School and is a visiting fellow at the Maryland Public Policy Institute. His email is firstname.lastname@example.org.