Baltimore is facing bankruptcy if it doesn't take drastic steps to close a shortfall that will hit $2 billion in 10 years, a new external budget forecast shows.
The city can expect to amass a deficit by 2023 that nearly equals its $2.2 billion annual budget if it does not figure out how to match spending and revenue, according to the report, obtained by
The Associated Press before its release Wednesday to the City Council.
The consulting firm Public Financial Management Inc., which also has advised Miami, Philadelphia, and Washington, D.C., projects Baltimore will be in the red by some $2 billion if infrastructure needs and retiree healthcare costs are included. Without those costs, the city is expected to face shortfalls of $745 million.
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Much of Baltimore's financial struggles stem from the erosion of its tax base, from 950,000 residents in 1950 to 619,000 today, and its high property and local income tax rates, which are the highest in Maryland.
City officials passed a bottle tax and increased hotel and parking taxes to close a $121 million gap three years ago, but insist they can't pile on any more levies without scaring off businesses.
"We've got to go from a vicious cycle to a virtuous cycle. That starts with a good, stable fiscal foundation for the city government," Baltimore budget director Andrew Kleine told the AP. "When you've lost so much population and the tax base has shrunk, it's very difficult to deal with."
Mayor Stephanie Rawlings-Blake said she believes the budget forecast accurately assesses the city's long-term financial health and has used it to draw up budget reforms, including a restructuring of retiree healthcare, she plans to unveil next week.
"It's not like we've had rosy budgets over the past five years, and now we're screaming that the sky is falling," she said.
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