investigativevoice.com

'MAD AS HELL' FRANK CONAWAY PUSHES FOR TAX REFERENDUM

By Ben Slivnick

Violent crime, lackluster schools and sky-high car insurance rates have long topped the list of reasons many Baltimore-area residents spurn city living.

But Anirban Basu, chief executive of the Baltimore-based economic consulting firm Sage Policy Group Inc., is predicting a new — and unsuspected — flight risk for city residents: a recovering housing market.

“It would seem to be counterintuitive to suggest that with the housing market improving this could be anything but good news for the city of Baltimore,” Basu says, but as contradictory as the argument might seem, its logic is rooted in a fact of city life familiar to anyone paying a mortgage: the property tax.

The logic is simple, Basu argues. A mid-decade city housing boom put city home values on par with surrounding counties -- but the city tax rate, at $2.28 per $100 in assessed value -- is still twice as high as the next cheapest jurisdiction, Baltimore County.

Thus when the stagnated housing market picks up, Basu predicts, a crop of value conscious homebuyers that may have been drawn into the city five to 10 years ago will soon be looking for a way out.

“People are presently searching for value and the city has a difficult time justifying those high property taxes based on the services it provides,” he said. “Unless the city is able to make a credible commitment to reduce its property tax over time, my sense is that a high number of households will choose to make that move out of the city.”

Basu’s analysis comes as Clerk of Circuit Court Frank M. Conaway has led a new charge of his own taking aim at the city’s property tax. More than 70 people attended a rally last week to pressure the City Council to reduce the rate, and Conaway said he expects hundreds for a follow-up event he is planning for later this month.

“I’m mad as hell and I don’t want to take it anymore,” Conaway said. “There’s something not right in this picture.”

If the mayor and council do not take concrete steps to lower the tax, Conaway said he’s prepared to force the issue with a voter referendum.

“Politicians are used to doing things the same-old way and they don't want to change,” Conaway said. “That's the easiest way to balance the budget, but they have to look at this issue in a different light.”

Conaway said he has amassed the money and manpower to collect the 10,000 signatures necessary to get the question on the city’s next ballot, and if voters approve a measure to bring down the property tax, the results would be binding. Conaway said he’s optimistic.

“People are just very, very angry,” he said.

But while Conaway insists the recession has made immediate action necessary, even the slightest decrease in the tax would have major ramifications for the city’s already cash-strapped coffers.

For each penny shaved off the property tax, the city would lose about $3 million in revenue. And with $585 million coming from property taxes this year, it raked in nearly half the city’s general fund.

The tax has been a focus for the city’s past three mayors. A committee commissioned by Mayor Sheila Dixon recommended the city to reduce its property tax by 32 percent — 72 cents — over the next several years, but the mayor’s spokesman Scott Peterson said the recession has stalled those plans.

The committee, known as the Blue Ribbon Committee on Taxes and Fees, laid out 16 recommendations to reduce the tax. So far, Dixon has only taken up one: taxing revenue from gambling.

“Closing the projected $65 million budget deficit took precedent over implementing Blue Ribbon Committee recommendations,” Peterson said. “We are doing what we can in this economy.”

Once the city’s proposed slots casino is finished, it is expected to knock eight cents off the property tax.

Until then, City Councilman Bernard "Jack Young (D-11) agreed that in time when the city is closing recreation centers and pools, the city cannot afford to reduce the tax.

“I agree with lowering the property tax, but I also realize that we rely on the property tax to run the government,” Young said.

Yet if the city doesn’t act soon, Basu said it will be regretting the decision later.

“Now is very easy time not to deal with the property tax given the state of the economy and falling income tax,” Basu said. “However, it’s important for policy makers to remember you can’t tax people who don’t live here.”