Baltimore Mayor Stephanie Rawlings-Blake has unveiled a fix for a city administrator’s nightmare: A tax credit that resulted in a windfall for developers and tax increase for city homeowners.
Rawlings-Blake unveiled a new automated system to make calculation of the tax credit to encourage preservation of historic buildings easier –and far more accurate. City officials are scrapping the old system in which humans calculated the tax break by hand to a streamlined computerized system.
“I am pleased to highlight a series of positive steps my administration has undertaken to help reduce Historic and Enterprise Zone Tax Credit errors in Baltimore City. The errors have frustrated tax credit recipients and have caused them to lose confidence in government’s ability to do one of its most basic functions,” Rawlings-Blake said.
Under the old system a few developers obtained windfalls of millions while at least 300 Baltimore homeowners face tax bills that were up to $600 a month higher.
“I share those frustrations and realize how upsetting these errors can be. At its core this is an issue of fairness—fairness to people who have done the right thing but are paying the price for an inefficient and poorly coordinated system. This administration has worked diligently to proactively identify errors and overtime. We have put in place mechanisms to crack down on mistakes. I believe the reforms we are highlighting today will go a long way toward building the public’s confidence in our ability to provide correct tax bills.”
City Director of Finance Harry Black put it simply: "There are too many hands actually touching the process."
“We’re still working retrospectively to deal with the previous errors,” Harry Black, director of the finance for the city, said at a press conference Oct. 7. “In terms of blame a lot of this comes from inadequate and poor interagency communications and coordination.”
At the direction of the mayor, the Finance Department created the Billing Integrity Unit and has effectively taken control of the tax calculation function from the State of Maryland. In addition, the administration has instituted an internal review of all tax credit accounts to identify errors.
These efforts will ensure that tax bills are accurate. The July 2013 bills were the first to be calculated by the City’s Finance Department since taking over the calculation function. The Finance Department believes those bills were distributed free of errors. It expects that the new automated system will be fully functioning and available to the public by March of 2014.
“Under the leadership of Mayor Rawlings-Blake, my department has worked diligently to get to the bottom of these costly errors. To that end, we have been proactive in completing internal reviews to determine where breakdowns occurred, resulting in erroneous bills being issued,” said Black. “Going forward, we will put additional controls in place to further improve the system. It is critical that we give these reforms a chance to work and refrain from any actions that may slow the process down for reform or could inadvertently lead to additional errors.”
The city was hoping that the state would handle the penalties caused by these errors but now say they are handling internally. No comment was given on when those affected can expect the errors to be resolved.