It appears that Mary Conaway has been forced to play by the rules by the cash strapped city of Baltimore.  Her updated previous three tax bills for her Cross Country house can now be looked up here. She is no longer receiving the credit retroactively and now owes the city $9362.32 in back taxes and late fees!  This blog played a major role in forcing the Conaway family to finally play by the rules.

Below are links to copies of the updated property tax bills:

2012= $1492.16 owed

2011= $2106.56 owed

2010= $5763.60 owed

From yesterday’s Washington Post:

“For instance, Baltimore collected $815 million in property taxes during the most recent fiscal year, according to Bill Voorhees, Baltimore’s director of revenue and tax analysis. Next year, the figure is predicted to shrink to $803.5 million. The following year, $773 million. The year after that, $735.7 million. The year after that, $729.4 million.”

On December 24, 2010 I predicted this scenario in this blog and I pointed out that this all could have been avoided if our leaders understood simple mathematics. Had our leaders practiced fiscal restraint during this past half decade and allowed the constant yield property tax rate to be our property rate then the budget would have never grown to its current size. Our leaders chose to increase Baltimore’s budget every year and now if they do not raise property tax rates it will be impossible to maintain it. Had we cut programs and salaries in 2007 or 2008 it would have been a lot less painful than what we are about to experience. Our leaders decided to keep kicking the can down the road and hope for a miracle.  If they truly understood the numbers they would have known that eventually the game would end and cuts would be unavoidable. If any elected official proposes higher property taxes because of this “unexpected” budget shortfall then they are not fit to hold elected office.  This economic scenario was very predictable.

The time has come to reign in spending and to get rid of all of the city government patronage jobs!

As I stated yesterday, it is silly to worry about the homestead property tax credit instead of the bigger City property tax issue:

During a five year period you will pay $34,020 in property taxes to Baltimore City on a $300,000 house.

During a five year period you will pay $13,650 in property taxes to Anne Arundel County on a $300,000 house.

$34,020-$13,650= $20,370 saved over five years by living in Anne Arundel County.

Before we even think about overhauling the homestead property tax credit we should look into some of the peculiar applications of it in Baltimore. This signed agreement from 2007 shows that 5th district councilwoman Rikki Spector occupies a condo unit at Harborview in the 11th district of Baltimore City. Rikki Spector lists 7404 Park Heights Avenue in the 5th district (and in Rosenberg’s  41st House of Delegates district) as her primary residence and receives a homestead property tax credit of over $1000 a year there. You can view her property tax bill here.

Let’s lower Baltimore’s property tax rate and eliminate “peculiar” or incorrect homestead property tax credits.

The Sun paints the homestead property tax credit in a negative light when it is actually not the problem in Baltimore. Baltimore’s insane property tax rate is the problem. If the homestead property tax credit disappeared tomorrow and all those old people had to pay taxes on the full value of their houses, Baltimore would still have a property rate that would be almost double Baltimore county’s rate (one assumes the new revenue would be used to lower Baltimore’s rate as much as possible). Baltimore’s property tax rate needs to be lowered and then we can talk about changing the 4% homestead property tax rate cap to something higher.  A change in the homestead property tax credit rate is not going to get new people to move to Baltimore, but it will drive current residents out of Baltimore.

Newer residents of Baltimore need to educate themselves on the situation they are getting into. If they do not like high property tax rates then they are not going to be happy with Baltimore. The high property tax rate is not the fault of the guy who bought his house at a dirt cheap price thirty year ago though.  Before you buy in Baltimore try and calculate your yearly tax bill and then calculate how much the seller should knock off the price of your house. This is a buyer’s market and they have the leverage to lower prices based on a real factor like future property taxes.  Do not be a naive lamb and blindly listen to your Realtor. He or she wants you to pay $300,000 for your house no matter what county you buy in because he or she gets a 6% cut!  You will be the only person to blame for getting stuck with a  $6800 a year property tax bill.  You could buy a cheap house like I did.  Baltimore has plenty of $100,000 houses out there.

Below is one final set of numbers that shows how silly it is to worry about the homestead property tax credit instead of the bigger City property tax issue:

During a five year period you will pay $34,020 in property taxes to Baltimore City on a $300,000 house.

During a five year period you will pay $13,650 in property taxes to Anne Arundel County on a $300,000 house.

$34,020-$13,650= $20,370 saved over five years by living in Anne Arundel County.

Current property tax rates in Maryland.

Lots of information from this report has been covered before. A few points that jumped out at me follow:

• There is no talk about putting a cap (even a temporary one) on spending. We can not keep spending at the current rate. Despite losing population we continue to spend more than ever before. In the conclusion section they finally mention one possible cut. I have always said that if we want to have a serious property tax discussion we must also talk about cutting wasteful spending. We all know it’s out there, the time has come to call waste what it really is and to eliminate it so we can be a leaner meaner city with lower property taxes. One drastic cut we could easily make is getting rid of the current city election cycle and replacing it with city elections when we have state elections in 2014, 2018, etc… I will discuss this issue in a future article.
• If the property tax plan includes an increase in the 4% rate at which property taxes can increase on homestead property tax credited properties then why return the rate to 4% in 2020? Why not 5% or 6%? I would be happy to have my property taxes go up 6% a year instead of 4% a year from 2020 until I die if it meant 100,000+ more owner occupied houses in Baltimore.
• The report did not seem to understand why it is a good idea to shoot for an identical (or lower) Baltimore County Tax rate ($1.10) Baltimore County is our main competitor for residents. We need to offer a competitively priced product.
• Part of the theory behind drastically lowering the property tax rate and announcing it (and making a big deal out of it) before it happens is that this will inspire people and businesses to move quickly and the effect will be felt quicker than the report predicts. This is a matter of opinion, but I am a strong believer in the confidence in Baltimore such an announcement would produce.

If Baltimore wants to continue to spend more and more money every year on services, projects, city employees, and just about everything you can imagine then if we want property taxes cut we are going to have to have more people and houses to tax. The mayor refuses to address the elephant in the room. WE NEED TO CUT SPENDING!

The mayor and so many other elected officials refuse to address this very important fact. If you cut programs then a constituency is going to end up angry. Some constituencies do not even live in the city, but they do fund a lot of campaigns (the unions for example). A real leader who truly wants lower property taxes will talk about what expenses need to go. Otis Rolley has talked about getting rid of the salaries of some deputy mayors. That is a good start.

Imagine if every city employee took a 10% pay cut and if 80% of policemen and firemen who only sit behind desks were fired? How much money would those moves save?

In the comment section of the Sun article I linked to, my friend Josh Dowlut posted the following:

“The city spends 14% of its general fund paying pensions to people who no longer provide any benefit to the city, that’s about as much as it spends on education (17.1%). It spends 37.3% of its general fund on public safety, how much of that goes to policing, trying, and and jailing non-violent drug offenders? How many deputy mayors do we have, something like 4 or 5? How many side streets get repaved smooth as glass while major arteries that connect to 95 like Lombard, and Eastern remain pothole ridden? How many $200 waterfront office towers like the new Harbor East Legg Mason building pay ZERO property taxes for the next 15-25 years?”

Cut some fat (spending) and give the savings back to the property tax payers in the form of major property tax cuts. A funny thing will happen once the property tax rate goes down far enough, people will start to move back to Baltimore. The mayor’s team has it backwards, it is not about getting people to move back here and then cutting taxes, it is about getting rid of useless politically connected jobs, policies, and projects then cutting taxes, and then ending up with more people living here!

For the last four years the city has on average paid $40million a year to satisfy city employees’ injury claims! There is no way that city workers deserved such a payout. If city workers were this injured/disabled then large percentages of employees that you encountered in city facilities would be visibly injured. This is clearly not the case. It is obvious that some city employees consider inflated injury claims to be a benefit of city employment. Whoever is determining these payouts needs to be given much stricter payout guidelines to follow.  Filers of frivolous claims need to be made examples of and sent to prison for substantial periods of time. The taxpayers of Baltimore can not afford to pay millions upon millions of dollars to scammers.

For years I have been an advocate of mass bureaucratic firings. This horrendous abuse of tax payer funds by city workers supports my position. If $20million of this yearly scam could be eliminated then every city tax payer could have their tax rate go down by about 6 cents. In other words if your property is worth $100k then for the last four years you have personally contributed about $120 per year to the $160million total that was paid to injury claimants from 2007 to 2010.

The call told me a lot about what we should expect from this campaign. This is a very early in the season political phone call!  The mayor must have a lot of money to spend and it is clear that she is not going to stand still while her early competition tries to chip away at her.

One question asked was who I plan to vote for. Rawlings-Blake’s name was listed first (this gave away the fact that she paid for the poll before she legally had to admit it at the end of the call) and Otis Rolley’s name was listed second. Frank Conaway and Catherine Pugh were also options. I think it is obvious that she considers Rolley to be her main competition at this point.

The call asked about what the Mayor should campaign on and listed topics that promoted her: Something about her “10 year plan” (an obvious way of combating Rolley’s talk about lack of a plan in City Hall) and something about how the current mayor has done a great job with the “mess she inherited”. Take that Sheila Dixon!

I was also asked what the main issue of this campaign should be: Jobs,  Schools, Crime, Property Taxes, or the Budget.  It is nice to know that property taxes are FINALLY being taken seriously by every major candidate.

There were demographic questions at the end. I was asked what sex I was, my age, and my race.

We are in for a long race!

DPW is not exactly known for being efficient.

Not only is the calender late and a waste of money, it also has two major errors in it. There are blank spaces where April 26th and 29th should be. It is hard to believe that they could not have proofread this thing. It is not like they were in a rush to get it out.

In order for this city to be prosperous our leaders are going have to get rid of wasteful projects and positions and return the money saved from the elimination of these things to the tax payers in the form of property tax cuts. City Councilman Carl Stokes brought property taxes back into the spotlight with his most recent proposal in front of the City Council. Stokes wants to bring down the city tax rate to $1.10 per $100 by fiscal 2017. That is the same rate as Baltimore County. His proposal is very similar to the Walters/Miserendino plan. Stokes should have brought this up a year ago when he rejoined the city council. It is pretty obvious that he is talking about this now in order to bring attention to his mayoral bid. Since it is a very worthy issue I am not going to complain.

The following embarrassing quote is from soon to be retired second district councilman Nick D’Adamo:

“If you believe in the Tooth Fairy, you’ll believe in Carl Stokes’s plan”

D’Adamo should retire now. It will be a great day for Baltimore when do-nothing anti-innovative attitudes like his are gone from city council. Please go far away soon Nick.

It is important to note that Otis Rolley also wants to drastically cut property taxes. The Mayor seems to be the only mayoral candidate who does not want to think outside of the box and give major property tax reform a try.

I found the following property tax/election related quote on the Baltimore Sun message board:

“Baltimore needs a political enema, an outsider and Rolley is the closest viable candidate so far on the horizon – he’s educated, not from here, has a modern view of economics and development/planning, he’s black… Stokes has run before and we know what he has (and hasn’t). He’s a member of the machine here.”

Baltimore needs a political enema… so true!