Baltimore city leaders have pushed forward a major initiative that aims to lower property tax bills for residents, which are one of the highest in the entire state and “roughly double” those of most surrounding counties, according to the mayor.
Property taxes in Baltimore are currently about 2.25 per $100 of assessed value. Under Mayor Brandon Scott’s plan, the property tax rate would be lowered to below $2 for homeowners, the lowest rate in half a century, as reported by local news channel WMAR2 News.
Why It Matters
Skyrocketing home prices and rising property tax bills during the pandemic have put an insurmountable obstacle in front of many U.S. would-be homeowners trying to step on the property ladder.
In Maryland, average property values were up by 12.7 percent last year, according to state officials—a significant slowdown after they increased by more than 20 percent during the previous three years.
But it is not only first-time homebuyers who are struggling; low- to middle-income households across the country are now seeing their budget tighten dramatically because of rising housing costs. That is why, in many cities and states across the country, lowering property tax bills has become an urgent issue for local lawmakers and leaders.
What To Know
Scott’s new three-part strategy to lower property taxes in the city was revealed by the mayor on Monday during a morning news conference.
The plan includes:
- An adjustment of the city’s Homestead Property Tax Credit, introduced at the February 9 City Council meeting, which would raise the cap from 4 percent to 6 percent, matching that of surrounding jurisdictions;
- The expansion of the city’s Targeted Homeowners Tax Credit, also known as the 20 Cents by 2020 program, to be presented to the Board of Estimates for approval with the city’s 2027 proposed budget;
- Boosting enrollment in the state’s Homeowners’ Property Tax Credit and Renters’ Tax Credit programs.
Altogether, these measures should lower property tax bills for Baltimore homeowners, though savings would vary from resident to resident.
“When paired with the other proposed adjustments, this change [raising the Homestead Property Tax Credit cap] will ultimately generate enough revenue to lower property taxes for the vast majority of Baltimore’s residential homeowners and ensure that the majority of impacted residents ultimately see their overall tax burden decrease below anticipated levels or remain net neutral,” Scott said in a statement.
According to city officials’ estimates, a Baltimore homeowner with a $100,000 property that gains $10,000 in tax value over three years, about a 10 percent increase, would save $129 within the same period.
A homeowner who experiences more moderate growth in the value of their home would actually save more money. Officials estimate that a homeowner with a $500,000 property gaining $30,000 in value, or 6 percent, would save $678 over three years.
The mayor and city leaders also announced on Monday that Baltimore will change its tax sale process so as to include raising the minimum bid for tax sale to the assessed value of the property. This, the mayor’s office said, should help ensure homeowners are not “deprived of equity” when their property is transferred through the tax sale process.
A tax sale is enforced by a government authority because the owner failed to pay property taxes.
The initiative would also establish payment plans for residents at risk of facing tax sale for the first time in Baltimore’s history.
What People Are Saying
Baltimore Mayor Brandon Scott said in a statement reported by CBS News: “We know that our property tax rate can be a challenge for homeowners, which is why—in addition to our broader housing affordability investments—we’re announcing this strategy to bring the effective property tax rate for residential homeowners below $2 this year.”
Baltimore Councilwoman Odette T. Ramos told reporters that the mayor’s strategy “would really help our homeowners.” She added: “We do have some that have been pulled out of tax sale—thank you Mr. mayor—that are really gonna need to get on those payment plans, but [it] also just make it easier for folks if they’re having a tough time one year they can go into a payment plan and be able to catch up and that will work with them.”
Budget and Appropriations Committee Chair Councilwoman Danielle McCray said in a statement shared by Scott’s office: “For many Baltimore homeowners, rising housing costs have created real financial pressure, particularly for those on fixed incomes, families working hard to remain in the neighborhoods they love, and residents who are the backbone of our middle neighborhoods.
“This bill reflects a fiscally responsible approach to preserving community stability and ensuring our middle neighborhoods continue to thrive. I look forward to working with the administration and my colleagues to advance legislative efforts that protect longtime homeowners while supporting Baltimore’s continued growth.”
What Happens Next
Scott’s plan could come into effect as early as the next fiscal year, as long as it receives the city council’s approval. The mayor hopes that lowering tax bills will make Baltimore more competitive against surrounding jurisdictions and attract new residents.
“This has been a real problem for the city of Baltimore, not being competitive with our surrounding jurisdictions, having a burden that is above everywhere else has inhibited the growth of our city,” he said.
The strategy, according to officials, should not come at a disadvantage of essential city services, which would be maintained.
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