City approves property tax credit for low earners
The Baltimore City Council approved a $2,500 annual property tax credit Monday for low-income municipal staffers, a move they hope will make home ownership more feasible for those who are among the “hardest-working, lowest-paid employees of Baltimore.”
Hundreds of janitors, clerical workers and other full-time city employees who are among the 25% lowest-paid will be eligible for the credit, should Mayor Bernard C. “Jack” Young sign the bill or allow it to become law without his signature.
The tax credit will help these city workers “not only to build wealth through a body of equity into their home or property but also to have more money available to spend on other things,” Councilman Ryan Dorsey, who introduced the bill, said at an earlier hearing on the bill.
“It’s money that’s probably going right back out into the local economy to achieve basic needs, to buy groceries, to pay for transportation, health care, diapers, school supplies,” he said. “There’s a communitybased benefit to freeing up that kind of disposable income to support businesses and local communities throughout the city.”
Every member of the all-Democrat council co-sponsored the bill.
It’s unclear how much this tax credit would end up costing: The Finance Department said officials should expect at least $815,000 of lost revenue, but warned it could cost the city in excess of a million dollars more if large numbers of city employees take advantage the new credit. Right now, a sizable percentage of Baltimore’s low-income employees either rent their homes or live outside the city.
In a January memo opposing the bill, a finance official wrote that the department “recognizes the importance of providing additional assistance to city employees, especially those earning the lowest incomes, but believes that creating tax credits is not the most efficient or effective way to accomplish this.”
The finance department also expressed concern about how it would affect city finances as Baltimore prepares for the possibility it will have to nearly double its spending on public education over the next decade based on a revamped funding formula developed by the state’s Commission on Innovation and Excellence in Education, nicknamed for its chair Brit Kirwan.
“In anticipation of the financial challenges the city will face with the Kirwan Commission’s school funding recommendations, the proposed tax credit could restrict our ability to properly fund services for city residents,” the memo reads.
Dorsey has pushed back on this, saying officials must figure out other ways to pay for education reforms — in a way that doesn’t hurt people who don’t even earn the city’s median household income of $46,641.
“We cannot exult the benefits of homeownership and at the same time act like we shouldn’t be creating more opportunity for lower-income people to become homeowners,” he said. “There are plenty of other ways Finance can figure out how to cut costs and increase revenues without it coming from the hardest-working, lowest-paid employees of Baltimore.”
This property tax credit is similar to one the council approved two years ago for Baltimore police officers and firefighters, part of an effort to get more officers to live in the city where they work. City data indicates that “few, if any,” officers moved to Baltimore based solely on the credit, the memo states.
The president of the City Union of Baltimore, which represents city employees, testified in support of the credit during a recent council hearing, saying that the union has a plan to encourage members to buy homes in the city. Antoinette Ryan-Johnson said the union will bring in real estate experts to help counsel workers through the process.
“When our members buy homes, they become invested in the community, help to stabilize neighborhoods, work to improve schools, generate economic activity and increase wealth for their families,” she said. “This bill addresses two serious problems hurting Baltimore City: a declining population and a drop in homeownership.”
Trevor Taylor, a longtime labor crew leader in the Department of Public Works, said the tax credit would be a big help to employees like him. It will “give them a chance to live the American dream and purchase a home for the first time,” he said.
“We don’t make a lot, yet we do an awful lot for the city,” Taylor said. “We are the ones that pick up the trash. We are the ones that fix the water main breaks. We’re out there in the sun. We’re out there in the cold.”
Dorsey said this legislation could help people in neighborhoods like Westport in South Baltimore. The median home purchase price there is $39,000, according to the nonprofit Live Baltimore, while the estimated rent is $1,135. If city workers who rent in such neighborhoods could access this tax credit, Dorsey said, it would help bridge a “capital access gap.”
The credit is expected to go into effect in 2021. The council also is considering a property tax credit for veterans or surviving spouses.