Raising tax revenue vs. stabilizing communities

Once again, the lack of prioritization of goals has caused waste, injustice and damage to the welfare of city residents. The situation in Baltimore, Maryland, is typical with the challenges confronting many metropolitan areas. The competing goals facing Baltimore City and many other urban areas as well are the need to raise tax revenues from liens against real estate versus the stabilization, revitalization and recovery of blighted communities.

It appears that the city of Baltimore has sold 12,689 tax liens at a recent tax sale auction. Apparently many of these tax liens were sold to speculators who purchase the liens for a few hundred dollars and charge property owners thousands of dollars for their redemption. In other words, in order to raise a dollar through this process, the City sells the tax lien to a speculator, and the speculator requires the property owner to pay ten to fifteen dollars, or lose the property. Because many citizens are unable to make these payments, they are now subjected to a process by which greedy speculators can exploit their inability to pay, creating more vacant housing and blight in the process.

The rational for selling tax liens to speculators at tax sales is that it assures the payment of tax and water bills. The thinking is that the threat of tax sale provides an incentive to pay, or punishment if the bill is not paid. This thinking is absolutely ridiculous and ultimately destructive. People don’t pay water bills on the basis of punitive threats; most people don’t pay because they just don’t have the money.

When Wall Street and the major car makers just didn’t have the money, trillions of dollars were provided to help them bridge the gap because a priority was placed on their economic survival instead of on punitive damages to further exacerbate their economic condition. In that context, saving the economy was more important than punishing Wall Street for its incompetence and the auto makers for their inefficiency.

By the same rational, selling properties at tax liens, when you are adding to the deterioration and destabilization of communities, is like cutting off your nose to spite your face. If this simple concept is understood, then the punitive and destructive process (of continuing to pile on debt and financial obligation on people who are unable to pay in the first place) would be changed to recognize the fact that the greatest good of the community – stabilization and recovery – would be increased by keeping in their homes those who have committed themselves to the city, until a more empowering environment is created to generate incomes with which persons will willingly pay their taxes.

A more proactive response to this issue would be to allocate community redevelopment and recovery funds to community stabilization. Such stabilization funds could be used to supplement the tax and other bills particularly of persons who have already, by their actions, committed their economic future and equities to the city. By keeping such persons in place, we can begin building a critical mass of persons who have a vested interest in fighting the blight and deterioration that is epidemic across Baltimore and most urban areas.

How much will it cost? In Baltimore, my estimate is less than $20 Million. What a bargain. People could keep their homes, stay in communities that they know and love, and provide a basis for passing along generational and community values rather than vacant, deteriorated and boarded-up houses.

In the context of a priority of stabilization, tax revenues would become of secondary importance to the extent that tax collection activities will not continue to exacerbate the conditions they seek to alleviate. Only then will policy have the impact of stabilizing communities and stopping blight. Keeping long-term residents in place despite water bills and delinquent taxes will help stabilize the community such that there will be a critical mass from which to multiply the redevelopment of threatened areas.

If we as a country can spend trillions to save Wall Street and large manufacturers, why not spend a few thousand dollars to help long-term residents of impoverished areas to stay in their homes particularly when the problems facing them are not caused by their personal irresponsibility but by the general conditions of poverty and blight and a lack of economic viability in the communities in which they live.