Maggie’s Legislative Update: Fixing Baltimore’s Property Taxes

Posted by Matt on February 7, 2014  |   Comments Off on Maggie’s Legislative Update: Fixing Baltimore’s Property Taxes


One of the great challenges faced by the city of Baltimore in recent decades has been figuring out a way to stem the tide of residents moving from the city to the surrounding counties. My colleagues and I in the City Delegation have worked diligently to find ways to improve public safety, infrastructure, and schools – and we will continue to do so. However, one of the persistent, unaddressed problems has been dealing with the city’s property tax rates that often are far higher than those of surrounding jurisdictions. press conference

This week, I introduced a series of bills aimed at reforming Baltimore’s property tax policies and, hopefully, making our city a more attractive place to live. I believe that these bills will address some of the issues I have heard about consistently as I’ve talked to neighborhood leaders throughout the 43rd. Every member of the Baltimore City Delegation has signed on to co-sponsor these bills and I hope we’ll have your support going forward.


Baltimore City Residential Retention Act

charles villageThe Homestead Tax Credit was designed to encourage homeownership among Maryland residents. Thousands of Baltimoreans have benefitted from the incentive, however under current law, long-time Baltimore City residents with an existing, accumulated Homestead credit are discouraged from relocating in the City and purchasing equivalent-value, or more expensive primary residence due to an often prohibitive increase in real property taxes owed. Older adults looking to downgrade to a smaller home or condo – in the vibrant, walkable areas of the city – as well as younger couples hoping to grow their families but find their homes too small – are pushed out into the Counties, rather than remaining in the Baltimore City where they might otherwise choose to live.

The Baltimore City Residential Retention Act would introduce a pilot program for a “homestead carryover” for a homeowner who lived in the city for the immediately preceding 10-year period and purchases a new, owner-occupied primary residence.  The 10-year tax credit would allow homeowners to carry the amount of current credit forward to their new home, with the amount declining by 10 percentage points each tax year thereafter.  The credit would be administered by Baltimore City with Homestead values confirmed by SDAT.

Baltimore City – Tax-Exempt Property – Certification of Use

According to a 2013 performance audit by the Office of Legislative Audits, Baltimore City has 17,024 tax exempt real property accounts (both improved and vacant) for eligible charitable, educational, fraternal and religious organizations.  This represents 30% of Baltimore City’s properties, and tens of millions of dollars of uncollectable property tax each year.  While these non-profits employ thousands of individuals and offer important services to the people of Baltimore, it is important to ensure that the tax rolls are up to date and that the properties which claim tax-exemptions are still being used for professed and eligible activities.

Similar to the Homestead eligibility application process established in 2007, SDAT and Baltimore City should establish a one-time recertification process to ensure that tax-exempt property accounts – assessed at over $3.5 billion in Baltimore City – are truly being utilized for the specified non-profit purposes. Non-profits will have two years to re-register their properties and use.


Baltimore City – Property Tax – Assessors

A logical extension of the previous two bills, this bill offers a one-time grant to the State Department of Assessment and Taxation and Baltimore City for on-the-ground property assessors to verify that properties are being assessed at the appropriate value and use.  Currently, SDAT’s Computer Assisted Mass Appraisal System is used to value over 737,423 property accounts per year and approximately 70,000 improved properties in Baltimore City per year.  The current system cannot detect inadvertent or deliberate misclassifications.

While this bill will have a fiscal note associated with it, the initial outlay of funds for on-the-ground assessors will be reimbursed by the significant increase in the tax rolls that are expected by righting the tax assessments and recovering millions of dollars in unclaimed taxes.


Study on Increasing The Homestead Tax Credit Cap and Property Tax Rate Reduction

Baltimore City’s real property tax rate is more than double the rates of surrounding counties:  2.248% , compared to Anne Arundel County’s 0.941% and 1.1% in Baltimore County.  This disparity has led countless families to find themselves torn between wanting to stay in the City and needing to be fiscally prudent.  Historically the Homestead Property Tax Credit has aided residential property owners by limiting the increase in county and State taxes, however in this, too Baltimore falls behind many other jurisdictions.  Three counties (Calvert, Montgomery and Somerset) have homestead credit “caps” of 10.0% – the statutory State maximum – while Baltimore City has an assessment “cap” of 4.0%.

This bill establishes a study to examine whether increasing Baltimore’s homestead assessment cap would result in additional revenue to the City allowing a slow reduction in the differential between residential real property taxes paid versus the full amount of taxes owed.  It will examine whether the residential property tax can be lowered to hold current residents harmless for a period of time, while lifting the cap of 4%.


Baltimore City Tax Equity Rate Study

baltimore_rowhomesBaltimore City and  SDAT’s Computer Assisted Mass Appraisal System is used to value over 737,423 property accounts per year and approximately 70,000 improved properties in Baltimore City per year.  Currently, SDAT uses a computer based modeling system.  According to a recent Baltimore Sun article, assessments have not been conducted according to the law, with reports of assessments conducted only once every nine years.   Constituents report that single-family homes located directly next to similar properties that have been converted to rental units seemingly have similar values, but the rental properties have been assessed at a significantly lower value. Commercial properties are also assessed differently than residential properties. The results of these inconsistencies is that residents in single family homes pay much higher property taxes than either commercial or rental properties in the same neighborhood.

The Baltimore City Tax Equity Rate Study would examine the equity of homeowner tax assessments as compared to rental and commercial properties.  The study would provide recommendations to the Maryland General Assembly and Baltimore City on way to improve the tax code to provide greater equity to Baltimore City residents.


As always, if you have questions, concerns, or my staff and I can assist you in any way please do not hesitate to reach out.


maggie sig