Baltimore administration seeks authority for up to 2% local sales tax to fund property tax relief
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Summary
Baltimore City officials told the House Ways and Means Committee that House Bill 1508 would authorize a local sales tax of up to 2% and could be used to reduce the city’s heavy reliance on property taxes, fund infrastructure and address vacant properties.
Baltimore City Administrator Faith Leach asked the House Ways and Means Committee on March 11 to give the city authority to impose a local sales tax of as much as 2% under House Bill 1508. Leach said each percentage point of the sales tax would generate roughly $69.3 million annually and that a 2% cap would let the city raise revenue locally to reduce the burden on homeowners.
Leach told Chair Atterberry, Vice Chair Wilkins and committee members that Baltimore currently draws about 49% of its general fund from property taxes and 0% from local sales tax, a distribution she said contributes to Baltimore’s comparatively high property tax rate. “By providing Baltimore with the opportunity to generate its own revenue through a local sales tax, Maryland would be aligning its tax policy with Virginia, Pennsylvania, New York, North Carolina and many other states,” Leach said.
The administration framed the proposal as a way to rebalance taxes between residents and visitors. Leach said the city would dedicate one percentage point of the sales tax — about $70 million — to provide a $1,000 flat property tax credit to homeowners and to fund rental assistance for renters. She said the tax would also fund infrastructure needs and help address vacant houses that strain city services.
Committee members asked about uses and comparables. Delegate Miller and others asked whether local sales tax revenues could be used for school capital projects; Leach said the proposal would fund “infrastructure and overall investment” in addition to property tax relief and that the city’s capital budget recently rose from about $80 million to $125 million. She also said no other Maryland jurisdiction currently receives a local share of the sales tax except Ocean City, which has a half-percent on food and beverage tied to its convention center.
Leach noted Baltimore’s status as an independent city without county resources and cited a CUNY Institute analysis saying peer cities receive an average of 21% of general fund revenue from local sales tax while Baltimore receives none.
No formal action or vote on HB 1508 was recorded during the hearing; the administration asked the committee for a favorable report.
