There was considerable rejoicing in Baltimore city this week when George Mason University released a study saying that, compared to Detroit, Pittsburgh, Chicago, Providence and San Bernardino, Baltimore is on “reasonably solid financial footing” and is demonstrating “financial resiliency.”
Of course those other five cities are all basket cases (two are in bankruptcy), so being best of the lot isn’t so hot.
The Baltimore Sun highlighted the parts of the report crediting Baltimore’s success to sound city management provided by a strong-mayor system which lets the city’s Board of Estimates (controlled by the mayor) write the city budget and run the city’s finances without interference from the City Council, which can only lower the spending levels, not increase them.
But if you actually read the George Mason report it tells a much different story. What’s really keeping Baltimore afloat isn’t its mayor or its charter, it’s the billions of dollars the state of Maryland pours into the city every year.
Baltimore runs on OPM: other people’s money. Much of what taxpayers in Maryland’s 23 counties send to Annapolis is recycled to Baltimore as direct and indirect state aid. Thanks to the city’s political muscle, decades of governors who were former Baltimore mayors (Schaefer, O’Malley) or city politicians (Mandel, Hughes) and a liberal state legislature, Baltimore now is the most subsidized city in America.
State taxpayers pick up the tab for the city’s community college (other community colleges are mostly locally funded); for the city’s metrorail, metrobus and light rail operating and capital costs; for the city jail’s construction and operating costs (county jails are locally funded); 71 percent of the city’s K-12 school budget (the feds pay another 10 percent); all of the city’s social services costs; most of the city’s road/bridge maintenance costs ($134 million a year); the operating and capital costs of what used to be the city’s port and airport (Friendship); annual grants to run the city’s zoo, museums, theaters, concert halls and libraries; and now the city wants the state to pay for its courts, as well.
To help boost the city’s economy, the state located a host of state agencies and departments in Baltimore; paid for the Ravens and Orioles stadiums, the Convention Center, the Aquarium expansion, the Science Center, the Meyerhoff concert hall, the Hippodrome Theater, the Christopher Columbus Center, the Lyric, Center Stage, a new $1 billion school construction deal ($20 million a year for the next 30 years) and a new $2.5 billion light-rail system. Meanwhile, the city wants the state to participate in a $900 million convention center/hotel/arena project in hopes that an NBA or NHL team will come if they (the state) build it.
Then there are all the hidden state subsidies: historic tax credits to rehab city buildings (the city gets more than half), enterprise zone tax credits (Baltimore gets 61 percent of the state total), a special city cut of the state’s casino tax, a $79 million annual “disparity grant,” special police aid grants and impact aid that the counties don’t get, using state police to supplement the city’s police force, rebuilding the city’s failing wastewater treatment plants and scores of other subsidies embedded in state law.
Ironically, on the same day that the George Mason study was released, so was an account of the city’s failed Reginald Lewis Museum of Maryland African American History and Culture, which the state built for $30.6 million. The state also pays half ($2 million) of the annual operating costs and now is paying an additional $450,000 of the other half because the museum is a dud (the 150,000 estimated annual attendance turned out to be 38,000).
But the city isn’t chipping in, and Baltimore state Sen. Bill Ferguson said, “The state has an obligation to ensure that the Reginald Lewis Museum continues to function.” An obligation?
That’s the city’s pervasive attitude — the state owes us. When Martin O’Malley was mayor, the city foolishly spent $305 million building a Hilton Hotel that’s now going broke, costing the city $28 million a year by 2023.
When asked recently about the Hilton boondoggle, O’Malley blamed it on former Gov. Bob Ehrlich. Why? Because, said O’Malley, “You may recall, at the time, that we asked (and) we were told ‘no’ by the then-governor.”
In other words, when O’Malley and the city tried to get the state to pay $305 million to build a loser hotel that private investors wouldn’t touch, Ehrlich dared saying “no.”
You see, in Baltimore’s view, the city is entitled to special status. Baltimore doesn’t owe the state taxpayers any gratitude; state taxpayers owe Baltimore more assistance. When state and city assessors recently miscalculated city residents’ historic tax credits, costing them huge new taxes, city politicians argued that state taxpayers should pay the costs.
And the city is lobbying Annapolis to shift city residents’ high auto insurance burden to suburban motorists. The audacity is stunning: When Detroit went bankrupt this summer, The Baltimore Sun editorialized “Why Baltimore Isn’t Detroit,” citing the city’s willingness “to make difficult decisions” without one word about the city’s massive state bailouts — the real reason why Baltimore isn’t Detroit!
The city has benefited, so far, from the largess of liberal Montgomery state legislators who don’t mind raising Montgomery taxes and cutting its state aid to help the city, from P.G. lawmakers with whom the city shares the loot and from Baltimore County lawmakers who feel linked to the city as long as the city’s problems don’t flow across the county line.
But things are changing: The city’s political muscle is dwindling (only 11 percent of the state’s population and 8.5 percent of the statewide vote), for the first time in memory there’s no Baltimore candidate running for governor, and federal spending cuts are squeezing the D.C.-area counties, which may not feel so charitable in the future.
Living on other people’s money only works until the “other people” decide differently. When that happens, what’s Baltimore’s “Plan B”?
Blair Lee is chairman of the board of Lee Development Group in Silver Spring and a regular commentator for WBAL radio. His column appears Fridays in the Business Gazette. His past columns are available at www.gazette.net/blairlee. His email address is email@example.com.