Posts Tagged ‘property taxes’

We need leaders who are fiscally proactive

Posted by ameister on Wednesday, January 26th, 2011

Last night’s State of the Union speech showed that fiscal responsibility is becoming an important national talking point.  Local jurisdictions need to realize that if the federal government is finally getting around to tweaking its budget that cities and states better get with the budget cutting program.

Property taxes will be a big issue this election.  Several mayoral candidates have talked about lowering property taxes and quite a few city council members have stated that the city can not afford to raise property taxes.

We have come to a point where property taxes must be talked about. The city is facing an $80million budget deficit and raising property taxes would be an easy and destructive way to help make up the difference. Since the last few years have not been kind to many citizens’ pocketbooks some of our local leaders know that voters will rebel if they think they have to give up more of their paychecks.

I am glad that property tax reduction and a refusal to raise property taxes are issues that are finally in the spotlight. The problem is that for at least the last four years there have been many voices warning about this day and it could have been avoided if the city had just chosen to become fiscally responsible during the last election in 2007.

Back in 2007 hardly anyone was talking about property taxes. Leaders did not want to be proactive and address this inevitable problem that drives people away from living in Baltimore. If you take a look at the issues I stressed during my 2007 campaign you will see that property taxes and selling city owned property were very important to me. It’s a shame that no candidate for citywide office touched on any of the fiscal subjects I brought up. Imagine if a leader would have adopted my goal of bringing down the property tax rate to under $2 per $100 of the assessed value of the property by the start of 2010? Had this simple and necessary plan been adopted in 2007 we could have easily attained my other goal of having an identical property tax rate to Baltimore County by 2018.

Baltimore’s property tax rate can still be lowered to close to Baltimore County’s rate in the near future, but it will be harder than it should have been because we will have a later start. We are also going to have to address major spending cuts in city government. I predict that this year’s spending cuts discussion will resemble the property tax discussion of 2007. We all know that spending cuts must be addressed but our leaders are willing to put it off until 2015 when we will be forced to deal with that issue. We need a brave leader with a plan who is not scared to talk about the inevitable. I am getting tired of saying “I told you so”.  We need leaders with sound business minds. In my next post I will finally address the not so sound fiscal ideas that I heard when I sat in on city council meetings earlier this month.

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City council fears the political ramifications of lowering property taxes

Posted by ameister on Friday, December 31st, 2010

All of you need to read this excellent article about lowering Baltimore’s property taxes to to 1% by Dr. Stephen Walters and Louis Miserendino. I have written about this subject numerous times in the past, but the Walters/Miserendino article really fleshes out some of the very important details behind the theory. It is a shame that we have been talking about lower property taxes since late 2007 and nothing has happened. Had we adopted the Walters/Miserendino solution 3 years ago then we would be well on our way to a miraculous Baltimore housing recovery.

The major obstacles holding us back from adopting this type of logical property tax initiative are most of the members of Baltimore’s city council. Our leaders care more about their elected positions than they do about the future of Baltimore. They would rather continue bribing ignorant voters with government jobs and wasteful entitlements than rein in spending in preparation for a drastic decrease in property taxes for every home owner in Baltimore.

If entitlements and government jobs are suddenly slashed then in theory there will be a backlash from certain segments of Baltimore that many council-members are not skilled enough to handle.  An intelligent councilperson would ally himself with a voter base that would not give a darn if wasteful entitlements and useless jobs were suddenly eliminated. ALL voters need to be taught that the positive long term ramifications far outweigh the possible short term pain from the loss of some programs and jobs.  Lower taxes can easily be marketed to the voters by council-people with an ounce of creativity.

We can not let the political greed of certain council-people stand in the way of progress. In 2011 every incumbent who does not support a drastic cut in property taxes should be vigorously campaigned against.

I give the Maryland Public Policy Institute a lot of credit for publishing the the Walters/Miserendino article. You should check out the Maryland Public Policy Institute‘s site.

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Government spending at every level is unsustainable

Posted by ameister on Monday, December 27th, 2010

The truth is slowly filtering into the mainstream media. Watch this 60 Minutes piece from last week.

Municipalities all across the USA will have to declare bankruptcy in the next year if the federal government does not come up with a bailout plan to save them. Many citizens are tired of bailouts so I hope that no bailout (printing of money that devalues the dollar) takes place.

If municipalities want to avoid insolvency then they need to start to cut expenses drastically. The 60 Minutes piece touches on some of the things that need to be cut. Public unions have wrangled incredible pension plans for their members out of our leaders. While many private sector employees have no pensions they (as tax payers) have to fund the benefits of public sector employees. The time has come to eliminate tax payer funded pensions for public employees at every level of government.

While the truth (impending municipal bankruptcies) lurks in the background, our thieving leaders try to distract us and say that we can afford to build a billion dollar arena in Baltimore. This is like saying that an unemployed mother of six can afford to purchase a Lamborghini.

Here is a tweet from a new State Senator Bill Ferguson that shows the unsustainable situation that we are in:

“MD Secretary of Transportation says MD will need to increase tolls soon to have any chance at funding transportation effectively”

Even if we foolishly continue to increase taxes and fees this problem is not going to be solved. The state and city need to stop spending like drunken sailors. Do you want higher taxes or the end of extravagant pensions and benefits for public servants?

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Baltimore home assessments should decrease in 2011 so we must lower property taxes now

Posted by ameister on Friday, December 24th, 2010

In 2010 property assessments decreased all over Maryland . One third of home owners should be receiving new 2011 assessments in the mail this week or next. These assessments should follow the decreasing trend that was first noticed in 2010. This is temporary good news for long time landlords and other non-homeowner occupants who are not protected by homestead tax credits.  In Baltimore the 2010 assessments decreased by 5.5%.  There is a very slim chance that in 2011 the city may be faced with a situation where they will have to RAISE property taxes to make up for a decrease in assessments. It is highly likely that such a situation will occur in 2012. We could have avoided this nightmare scenario if we understood and implemented the constant yield tax rate in 2010. Most likely it is still possible to avoid this scenario if we implement the constant yield tax rate in 2011.

“The Constant Yield Tax Rate is simply a property tax rate that, when applied to new assessments, will result in the taxing authority receiving the same revenue in the coming taxable year that was produced in the prior taxable year.”

For at least the last 6 years the city of Baltimore has used a property tax rate that is higher than the constant yield tax rate and thus produced a larger amount of property tax revenue for the city. If the city were to actually manage itself correctly then we would have lower property tax rates every year. When Baltimore sees the potential for more revenue at the expense of the property tax payer they suck up the money and create new programs to fund (while still hardly maintaining the older programs). If we do not stop this madness this year then property tax payers will end up paying far more for it than they ever imagined in 2012. Below are some easy to follow numbers that I came up with in 2009 that help explain my scenario.  These numbers are not exact but they show the direction that I feel we are going in because of decreased property values and the popping of the real estate bubble.

Let’s say that in year 1 Baltimore collected $100,000 in property tax revenue. In year 2, one third of the assessments decreased by 5.5%, but because of past housing bubbles two thirds of the assessments are being phased in from the past and are still rising. In order for the city to collect $100,000 in year 2 the city would use a constant yield tax rate (CYTR) that was lower than the current property tax rate. The city chooses not to use the CYTR. They stick with the old rate and they collect $105,000 in property tax revenue in year 2.

In year 3 the next third of properties gets reassessed. Assessments drop on these properties, but one third of the properties’ assessments are being phased in from the past and are still going up because of past housing bubbles. In order for the city to collect $105,000 in year 3 (like it did in year 2) the city would use a slightly lower CYTR than the current property tax rare. The city opts to keep the current tax rate and it collects $107,000 in property tax revenue.

In year 4 the final third of properties gets reassessed. Assessments drop on these properties. Phased in assessments are no longer significantly increasing anywhere. Over the last 3 years an incredible amount of houses have lost assessed value. If the current property tax rate is used, only $100,000 in property tax revenue is generated. In order for the city to collect the $107,000 it collected last year it must use a CYTR that is HIGHER THAN THE CURRENT PROPERTY TAX RATE! Property tax rates are increased in order to hit the CYTR requirement. Welcome to 2012! Had the city used the CYTR in year 2 it never would end up in this situation. This is why we must cut government programs, fire government workers, and lower the property tax rate to the CYTR in 2011. If we manage our expenses correctly now, then lower assessment will not be a major issue in the future.

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If Baltimore wants to save money then give residents the option of receiving bills online

Posted by ameister on Wednesday, June 16th, 2010

If you own a house in Baltimore then in theory you receive numerous bills and notices via snail mail from the city over the course of a year. Sometimes the bills are lost in mail (probably never mailed out in the first place) and you eventually find out you have all sorts of lovely fines tacked on to the original high bill that you never received.  It is just another ugly aspect of city living that pile up over time and drive people away from the city.

Credit card companies, phone companies, and energy companies all give us the option of receiving bills online only. It saves the companies money because they do not have to pay postage or printing costs and it is environmentally friendly. Imagine if the city allowed us to opt out of receiving our water bills, tax bills, rental registration bills, and other notices via snail mail.  There would be no more “lost in the mail” excuses and the city would save on postage and printing costs. I definitely would choose to receive my water bills electronically.

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I like parking ticket amnesty more than tax hikes

Posted by ameister on Monday, May 10th, 2010

Last Monday Investigative voice published an excellent article about the possibility of parking ticket amnesty in Baltimore.  The City Council is considering allowing people with unpaid parking tickets to pay their tickets without fines for a limited amount of time. This last happened in 2003 and was not supposed to happen again until at the earliest in 2013.

In these desperate economic times I think it is at least worth a try to issue a temporary parking ticket amnesty and see how much money is raised. It can’t hurt and it is better than new fees and taxes for the rest of us.

I have covered issues related to this one in the past and there is a facebook thread that talks about parking ticket amnesty here.

Thanks again to Investigative Voice for bringing this issue into the spotlight.

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No hidden taxes on homeowner occupants

Posted by ameister on Wednesday, April 14th, 2010

The Baltimore Sun says the following are some of the Mayor’s revenue generation ideas:

Fee Cost Projected revenue
Hospital and university bed tax $350 per bed per year $4.12 million
Parking fines $4-$60 increases $1.68 million
Beverage container tax 4 cents $10.75 million
Property tax early pay discount Decrease from 1% discount to .5% for paying in July, Eliminate .5% discount for paying in August $2.5 million
Hotel tax Increase from 7.5% to 10% $3.9 million
Income tax Increase from 3.05% to 3.20% $5.9 million
Telecommunication tax Increase from $3.50 to $4.00 per month for most types of phone lines $3.75 million
Parking tax Increase from 16% to 20% $5.8 million
Energy tax Increase 15% $8.16 million

Revenue generation is just one way of closing the $121 million budget gap. It appears that our leaders want to generate some of their revenue from people who live outside of the city (parking tax, hotel tax, and bed tax). They are on the right track. There is no way that property owning city residents should be squeezed anymore though. An increase in the income tax is just another way to get money out of homeowners without raising property taxes. The energy tax and the telecommunications tax will also hurt the already overburdened city home owner occupant. Home owner occupants are what Baltimore can least afford to lose.

Our leaders can not fear mass bureaucratic firings and pay cuts. Many of the people who work for the city do not live in the city so firing some of them would fit with the theme of having those who do not live in the city share the burden.

Even though I usually pay my property taxes early I can accept the elimination of this discount. I doubt that many people pay their property taxes early anyway. I think the bottle tax will hurt local businesses and thus it should not even be considered.

If parking meters function correctly and parking enforcement is fair and just, then I can deal with increased parking fines. Read the street signs and you should be fine. This is another fee that should hurt outsiders more than residents.

Every elected official should take a 20% pay cut. I noticed the Mayor did not make that suggestion.

Fire some useless bureaucrats before you make me pay a penny more to fund the ridiculous salaries and benefits of other useless bureaucrats.

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My review of the state of the city speech

Posted by ameister on Wednesday, February 24th, 2010

Mayor Rawlings-Blake rocked Sheila Dixon on Monday! Her speech was head and shoulders above Dixon’s speech from last year. The real question is if this Mayor can bring about the radical (for Baltimore at least) change that she spoke about in her speech.

The event started out in classic Baltimore fashion with City Council President Jack Young stumbling through his opening statements. The man is not a good public speaker. The Mayor’s mastery of her speech made his words seem even more lacking than they originally appeared. Young had a nice light suit on though. That was a positive I guess. Young gave the mayor flowers before her speech.

Since politicians have huge egos they had to introduce all the visiting politicians that were in attendance. Elijah Cummings, Curt Anderson, Melvin Stukes, Joan Pratt, union leader Glen Middleton , a firefighters’ union rep, a school union rep, a police union rep, Judge Holland, and Helen Bentley were all announced. Patricia Jessamy was not there. I was worried that with all those union people present that the Mayor would promise them benefits at the expense of the taxpayer. She did not even come close to doing that though.

The Mayor got down to business right away. The differences between her style of speaking and Dixon’s style were noticeable immediately. The mayor spoke in a clear calm voice. Her speech was to the point, short yet concise, and forward looking. She actually brought up non-fluff topics that could cause controversy! You can watch the entire speech here. After watching this speech one has to wonder why we were not embarrassed by the former Mayor every time she spoke. Yesterday’s speech was a breath of fresh air on so many different levels. It was a new beginning and a renewal of a kind of Baltimore pride that had been lacking during the Dixon years.

After the light business suit wearing Mayor thanked her benefactors (O’Malley and Cummings) she jumped right into a subject that Dixon had avoided- Property taxes! The Mayor is sending a signal to the citizens that she is very much aware of the fiscal problems of this city and that property taxes are one of the biggest economic problems many citizens deal with. It was refreshing to at least hear that this mayor cares about basic municipal economics and fiscal responsibility.

“$120 million equals twenty-two-hundred City employees or 55% of our civilian workforce.”

If I were her I would try to fire as many of them as possible in order to make up the impending $120 million deficit.

“Mark these words, remember them and factor them into our actions and decisions in the coming days: This $120 million deficit is brutal and will hit all of our citizens hard. I speak plainly and bluntly. If we sugar coat our problems, we will never rise above and solve them.”

The Mayor did what I thought she would not do, she straight up told us we had a problem that would be painful to fix. She even brought up the always hush-hush “pension time-bomb”.  He speech was not union-friendly! I was shocked.

“Chief among these sacrifices is pension reform for police officers and firefighters.”

Wow! Has someone from the Mayor’s office been reading this blog?

“Despite a deficit equal to a thirty-six cent increase on the property tax rate, if we work together, we can pledge we will not raise property taxes to fix this budget gap.”

Bravo!!!!

“Finally, I’m cutting the entire Mayor’s Office budget by 10%. We will do more with less.”

Has mild fiscal responsibility really returned to Baltimore? Please let the Mayor’s words turn into actions!

The transcript of the Mayor’s speech can be found here.

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Higher property taxes for vacant houses in Baltimore

Posted by ameister on Thursday, February 18th, 2010

State Senator George Della of the 46th District filed Senate Bill 889 a few days ago. The bill’s goals are to encourage vacant property owners to renovate their properties and to possibly generate enough tax revenue to lead to a reduction in the overall property tax rate.  I think it is a good first step in altering Baltimore’s property tax structure.  I do not think it will be able to generate enough revenue to lower the property tax rate in the city and I fear revenue that it might generate will be used on wasteful new programs. It is worth a try though.

I think it is also worth it to directly reward Baltimore homeowner occupants with a drastic property tax cut. I feel this would be the most beneficial move the city could make. Home ownership costs would decrease if the owner occupant property tax rate was dropped drastically and the result would be more interest in being a Baltimore city homeowner. Higher property taxes for vacant and uninhabitable real property in Baltimore will make investors think about selling or renovating but that does not necessarily mean new home owner occupants. If this bill becomes law then vacant and uninhabitable real property prices will drop and I feel that is a positive.

I received an email from a reader who does not like this bill. Here are his reasons (he describes why a supporter likes this bill at first):

“Basically what happened to him was he bought into a neighborhood that was half – three quarters redeveloped and paid a pretty penny for his place and
has high taxes. The real estate bubble burst and projects in his area went
on hold. It upsets him to come outside and see projects not completed. He
now wants these developers to pay higher taxes.

This is against everything I was taught about the tax system. And in general
is just vindictive. It also will make the rich richer and keep the poor
poor. Any fledgling developer will need more money to start into the market.
I just think it is a bad idea. I call it the “ugly tax” because if your
property is ugly it gets charged more.”

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The people of the suburbs need to return

Posted by ameister on Monday, November 30th, 2009

A few Tuesdays ago I found myself in Baltimore’s northwestern suburbs. Around 9AM I received a phone call from my grandmother asking me to pick her up off of Greenspring Avenue in Pikesville and take her to a doctor’s appointment also off of Greenspring. It seemed like an easy request. I would need to get on to 795 then 695 and finally the Greenspring exit off of 695. It was after 9AM so rush hour had to be over.

A little before 9:30 I ran into my first problem in the middle of 795. Traffic suddenly slowed to a crawl. On the radio they were talking about problems on 83 and both sides of 695. I quickly figured out that 795 was backed up all the way to 695. Eventually I could see 695, both sides of it were totally backed up! How can people put up with situations like this every day? In the city there always is some sort of escape route in most traffic situation. I was trapped on 695 until Park Heights (where I took a masterful back route using Stevenson road and Old Court). I had a lot of time to think during this frustrating journey. I know there has to be a substantial number of people who commute like this who would give it all up to live in Baltimore if Baltimore had a better reputation and property tax structure. The self-employed lifestyle that I live in Baltimore is far more rewarding and less frustrating than sitting in endless traffic jams. The city of Baltimore needs to do a better job of marketing itself to people who hate the situation I found myself in on that Tuesday. There is no shame in trying to make Baltimore a livable place for the middle class descendants of the people who once lived here. We need their property tax revenue and they need to quit these insane traffic jammed commutes.

The final destination on my journey was a brand new medical complex located at the new quarry development off of Greenspring in Pikesville. A few years ago this area was just a huge hole in the ground, but today it is a sprawling development filed with overpriced condos, houses, doctors, and stores that cater to the over-60 crowd that is stuck in and around the development. There are also plenty of younger people who live in the vicinity and patronize the businesses there. With all the empty houses and lots in Baltimore they still find numerous people and businesses that are willing to invest in gigantic new boring developments based around a hole in the ground in the county.  We need leadership in Baltimore that will come up with creative solutions that will get some of these people back into the city. Selling out to corrupt developers that produce inferior products is not a creative solution by the way. Property Taxes and public safety are two huge issues that must be properly addressed before the city can really compete.

Below are two photos I took at the quarry. To be there in person and to have seen what was once there really shows how desperate the situation is for Baltimore City. In the county a hole in the ground becomes a sprawling city while in Baltimore parts of a once sprawling city become a hole.
quarry1

quarry2

Start the Revolution!

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