An effort to cut Baltimore’s property tax rate nearly in half took another blow Friday night, when a Baltimore circuit court judge ruled that the measure violates state law and should not appear on the November ballot.
The decision on the Renew Baltimore ballot measure comes as a temporary relief to officials in City Hall, where the proposal has stoked fears of cratering city finances. Baltimore’s top leaders have denounced the proposal, with Mayor Brandon Scott even predicting it would bankrupt the city.
Friday’s ruling from Circuit Court Judge Althea M. Handy sustains an opinion released a month ago by Baltimore’s top elections official, who found the measure violated Maryland law and should not go to voters this November.
In a six-page opinion, Handy determined Renew’s proposal would illegally strip “all power and discretion” on the local tax rate from Baltimore leaders and would leave “nothing for the City Council to legislate because they would be required to lower the tax rate every year.”
In a statement, backers of the ballot measure said they intend to appeal the decision to the Supreme Court of Maryland. The high court is expected to take up the case expeditiously in time to print ballots before the general election.
“Renew Baltimore is disappointed but not surprised by today’s ruling,” said Ben Frederick, a member of the ballot measure’s advisory committee, arguing the decision goes against the will of the thousands of people who signed to put the property tax question before voters. “We remain confident that the tens of thousands of Baltimore citizens who support capping Baltimore City’s property tax rate at a level that is responsible, fair and equitable will ultimately prevail.”
The Renew Baltimore proposal would gradually shave Baltimore’s highest-in-Maryland property tax rate over seven years, reducing the rate from 2.248% to a maximum allowable level of 1.2%. Economists and former elected officials backing Renew Baltimore have argued the proposal would help to reverse decades of population decline in Baltimore, bring in new investment and lower crime — jump-starting the economy and counteracting losses to city revenues.
The two sides clashed in Handy’s courtroom Thursday over the merits of such a dramatic change to the property tax rate.
At the center of the legal battle is a question of whether Renew would determine the local property tax rate from the ballot – a power Maryland’s Constitution reserves for elected officials. In court filings and in Thursday’s hearing, the two sides have disagreed over the implications of a 1990 Maryland high court decision on this question.
The city and elections officials argue that Renew’s mandated cuts effectively set the tax rate. Attorneys for the ballot measure, meanwhile, have argued in court filings that their proposal wouldn’t set the tax rate but merely cap it – in theory, the city could cut taxes below the prescribed yearly maximums.
At Thursday’s hearing, Handy pressed Renew’s attorneys on why their proposal wouldn’t forcibly “roll back” Baltimore’s property tax rate and therefore result in lower revenues.
“It’s a basic economic principal that, when rates go down, revenue goes up,” responded Renew lawyer Constantine J. Themelis, who argued that the effort aims to reverse Baltimore’s economic fortunes, not deplete its coffers. “It’s imposing a reasonable limit.”
The city’s attorneys, meanwhile, told Handy that the Renew charter amendment would deprive elected leaders of their legal right to set the tax rate through legislation. A memo filed before the court cites the same 1990 ruling, which the city argues struck down even “less drastic” attempts to manipulate tax rates from the ballot.
At the same time, such a severe cut to the property tax rate would jeopardize Baltimore’s ability to meet its legal requirements to provide basic services to residents, Hilary Ruley, attorney with the city Law Department, told Handy.
Not only would services like education suffer, but the city would also be unable to meet other obligations, such as employee pension and retirement costs, Ruley said. A report released by Scott’s Finance Department forecasts that within a decade Renew’s measure would result in an annual structural deficit of nearly $900 million, while counteracting those losses would require making up for half a century of population decline in just seven years.
If successful, Renew Baltimore’s proposal would render it impossible for Baltimore to balance its budget, Ruley argued. “This drastic cut would leave the city government crippled.”
Scott celebrated the decision Friday night.
“Hopefully now we can put this ridiculous proposal behind us and have a real conversation about reducing residents’ property tax burden responsibly,” the mayor’s office said in a statement.
After Baltimore leaders passed on an opportunity to introduce a competing measure that might have nullified Renew, opponents of the effort are banking on the courts to keep the measure off the ballot.
If reinstated by the Supreme Court, Renew would face good odds of passing into law in November. Baltimore voters have historically tended to approve ballot measures almost automatically. Just one measure in the last 25 years has failed.
