The city of Baltimore is headed for bankruptcy if it doesn’t make the necessary reforms to avoid it, according to a 10-year financial forecast Mayor Stephanie Rawlings-Blake commissioned from an outside consulting firm.
The report released Wednesday projects a $745 million deficit over the next decade largely because expenditures are growing faster than revenue, particularly in the areas of employee health care and pension costs.
Add on another $1 billion infrastructure deficit over the next decade — and that’s just to maintain roads, bridges, and city buildings at levels far short of the current state of repair. It does not include schools.
“So we’re looking at a $2 billion shortfall over this coming 10-year period,” Baltimore City Budget Director Andrew Kleine said, after summarizing the forecast by Public Financial Management Inc.
The city government also has an unfunded retiree liability of more than $3 billion for the next decade. Most cities, including Baltimore, don’t include increasing future costs of retiree health care in their yearly budget.
The city can’t tax its way out of the problem, the mayor said, because its income taxes are already the highest allowed by state law and its property taxes are the highest in the state.
“Baltimore’s high overall tax burden — especially the property tax rate — falls disproportionately on city residents and businesses, further impeding the city’s ability to compete for growth,” Rawlings-Blake said at a news conference today.
The mayor said she would talk about solutions at the State of the City Address on Monday.
“I plan to propose a bold set of major reforms to address the fiscal challenges outlined in the 10-year forecast,” Rawlings-Blake said.
In Annapolis, the chairman of the city’s Senate delegation is hopeful there will be a solution.
“I don’t think it’s a time to go into mourning; I think it’s a time for us to get re-energized and to start being creative,” Sen. Verna Jones-Radwell said.
The forecast was done so that Baltimore can have a long-term financial plan, rather than budgeting year-to-year, Rawlings-Blake said. “We are being proactive identifying the problem and seeking to address it before it’s too late to make our own choices.”