The Board of Estimates today lowered by one cent the tax rate for owner-occupied properties by adjusting the Targeted Homeowner’s Tax Credit Rate by $0.203 per $100 of assessed value.
Translation: the average homeowner in Baltimore (whose house is assessed at $150,000) could see about a $16 reduction in property taxes in fiscal 2017, starting July 1, compared to the current year.
(This credit applies only to homeowners who qualify for the Maryland Homestead Tax Credit. The tax rate for rental properties and businesses remains the same.)
For homeowners, the reduced tax rate could easily be overwhelmed by an increase in assessments.
Each year tens of thousands of houses are reassessed by the state. If the assessment of that $150,000 average house goes up by a few thousand dollars, the one-cent-lowered tax rate is effectively wiped out.
Another wrinkle in computing the value of the targeted tax credit is that it applies only to the improved portion of a property (not the land), so homeowners will receive slightly different credits on their overall tax levy.
While the reduction hardly amounts to a windfall for residents facing other city fees, such as sharply rising water and sewer bills, it is two cents lower than the amount anticipated under the “20 cents by 2020” plan introduced by Mayor Stephanie Rawlings-Blake in 2012.
Even so, the average $2.12 rate next year (with some properties a bit higher and some a bit lower based on their land/improvement ratio) will be considerably higher than in surrounding jurisdictions.
Baltimore County’s rate is $1.10 per $100 of assessed value, while Anne Arundel County’s rate is $0.92. The 2015 property tax rates for Carroll, Harford and Howard counties hover just above $1.00, according to on-line state records.
During Rawlings-Blake’s six years in office (she is not seeking reelection and will depart City Hall in December), the property tax rate for owner-occupied houses has dropped from $2.25 to a little less than $2.12 per $100 of assessed value.
Betting on Gambling
In seeking to lower the tax rate, the mayor had pinned her hopes on the Horseshoe Casino.
Opened in 2014, the casino pays a ground-rent lease to the city on its property on Russell Street. The administration allocated 90% of the lease revenue to the property tax reduction plan.
During its first full year of operation, Horseshoe yielded far fewer tax dollars than expected, and the city’s anticipated cut in homeowner property taxes fizzled.
So far in 2016, the casino’s revenues are more in line with expectations.
But the city has also spent considerably more than expected for additional policing and infrastructure improvements around the casino, which has offset the revenue gains from gambling.