A Skeptical Council Debates Proposed Prince George’s Tax Increases

Prince George's County Council. All images by County.

A funny thing happened last week at a town hall meeting in Capitol Heights: the Prince George’s County Council actually engaged in a meaningful and full-throated debate with citizens and the executive branch of county government over the proposed FY2016 public schools budget.

The council is weighing county executive Rushern Baker’s proposal to raise a variety of local taxes, including a 16% increase in real property taxes, to pay for the additional $133 million that the school district is seeking in next year’s budget. The council must approve a final budget no later than May 31 for the fiscal year beginning June 1.

Public hearings before the county council are often like choreographed stage plays, where council members listen in polite silence to their constituents for up to three minutes each and then either immediately adjourn or, with little to no debate or discussion, proceed to do what they had already made up their minds to do. (Tuesday's budget hearing in Upper Marlboro generally followed that mold.)

But council members went somewhat “off-script” at last week’s town hall, which was held at Central High School on April 21. Instead of dispassionately receiving public comments, council members became integrally and vocally involved in the debate. They listened intently and actively, often amplifying the concerns expressed by the citizens. And sometimes, they openly challenged the county executive and the CEO of the Prince George’s County Public Schools (PGCPS), Dr. Kevin Maxwell.

Baker and Maxwell have been holding their own series of meetings with the public, but those have been much more stilted affairs by design. Typically, the county executive and his staff, the schools CEO, and the school board chair, Dr. Segun Eubanks, give a presentation about why they are proposing the tax increases and the expanded schools budget. Then, they proceed to answer selected written questions that the audience members have put on index cards. However, the county executive’s staff handpicks the questions that are actually presented to the panel for a response.

Dr. Eubanks, Dr. Maxwell, and County Executive Baker

Baker, Maxwell, and Eubanks were also present last week at the council’s town hall, and they gave essentially the same presentation as they typically do at their own forums. This time, though, the citizens’ questions were coming from the floor, uncensored, and the council members were present to hear and react to them in real time.

If you have time and want to get the best overview of all sides of this debate, you should really watch the whole three-hour town hall. For those that can’t or don’t wish to do that, here are a few of the highlights:

Rushern Baker falsely believes the only thing holding down Prince George’s home values is the county’s low-performing schools. The county executive seems to have convinced himself that he has solved all of the county’s myriad of problems and that the only thing left for him to do is transform the school system: “The reason the value of the homes in Prince George’s County aren’t the same as surrounding jurisdictions is not because of crime, because crime is down; it’s not because of economic development, because we have economic development coming; it’s not because of healthcare. It’s because of our schools,” Baker exclaimed. The quality of the schools “determines the value of the homes. That’s the difference between us and the other areas…That’s the only thing we haven’t done.”

Baker’s claim, of course, is more political spin than substance or truth. School quality certainly has an impact on home values, but it is not the sole factor. Nor is the relatively low quality of Prince George’s schools the sole factor that distinguishes Prince George’s County from its neighbors.

As the Washington Post reported earlier this year, the county’s racial demographics significantly reduce home values irrespective of any other factor. More importantly, it is well known that the county’s long history of corruption and its overly politicized development review process significantly hinder major employers and high-quality developers from doing business in the county. And let’s not forget the devastating economic consequences of the county’s more than 30 years of neglect of its transit-rich inner-Beltway gateway communities. These are all real issues that the county executive must face honestly—and none of them have anything to do with schools.

Lehman chastises Baker for rushing this proposal through and not seeking to build public support for it. In one of the more heated exchanges of the evening, councilwoman Mary Lehman (District 1) pointedly criticized the county executive for his take-it-or-leave-it approach in seeking to push these hefty tax increases through: “This cannot be presented as an all-or-nothing. We should’ve had this conversation a year ago, and Mr. Baker could’ve built public support for [this budget]. And he chose not to.”

Baker & Lehman square off in a tense exchange.

Toles and Lehman push back on Baker’s comparison of Prince George’s to its wealthier neighbors. One of the county executive’s central talking points for why the county needs higher taxes to fund schools is that counties like Montgomery pay more for their school systems, including paying higher salaries for teachers. But council members Karen Toles (District 7) and Mary Lehman (District 1) countered that argument with the reality that Prince George’s is simply not as wealthy as its neighbors.

“In other counties…they have a higher commercial tax base, so they have more money coming into their coffers, so they are able to invest more money,” Toles said. In spite of that wealth disparity, Toles rightly noted that Prince George’s already pays a similar percentage of its local taxes into education, and that Prince George’s gets more state aid than Montgomery does to make up for the wealth disparity.

Lehman made the point more plainly to Baker: “When you compare us to Anne Arundel and Howard, you do us a huge disservice…I think it is disingenuous to compare…this county to our much wealthier neighbors…We don’t have a money tree in this county.”

Councilman Turner

Turner urges caution, noting that the proposed increase to the school system budget will be virtually irreversible in future years. Councilman Todd Turner (District 4) urged his colleagues to consider the future ramifications of making such a huge increase in the school system’s operating budget. Under a Maryland state law known as “maintenance of effort,” counties are generally prohibited from reducing the amount of their local portion of school funding. Therefore, if the county accepts the county executive’s tax increase proposal this year, it will have to continue funding schools at that level in subsequent years—even if CEO Maxwell’s strategic plan doesn’t end up bringing the school system from near the bottom into the top 10, as he predicts.

Councilwoman Taveras

Taveras suggests postponing any increases in the school budget until an independent performance audit is completed. Councilwoman Deni Taveras (District 2) pointed out that the county spends 64% of its local revenues on the public school system and that it is important to ensure that PGCPS is spending that money in the wisest and most effective way possible. She further declared that “this budget is not going to move” until the county council reaches an agreement with the school system as to how and when a performance audit will be completed.

Toles expresses disbelief that a funding increase will result in better schools. Councilwoman Karen Toles (District 7) asked CEO Maxwell point blank whether he could guarantee that the $133 million increase that he is proposing as part of his strategic plan will in fact raise PGCPS’s ranking “from the bottom to the top.” CEO Maxwell said he could, and noted that he had already started turning the school system around by increasing graduation rates, improving promotion rates, and growing enrollment.

Councilwoman Toles

Unpersuaded, Toles shot back, “I don’t believe you.” She noted that Baltimore City pays the second-highest amount per pupil in school expenditures, but nevertheless remains at the bottom of the heap in terms of performance. Additionally, Toles cited Maxwell’s successes during the previous academic year as evidence that the school system can make improvements without huge tax increases.

Toles’s and Tavares’s points actually get to the crux of the issue, which is that there is no necessary correlation between more money and better schools. As I outlined in an earlier article, there are other large school systems with economies comparable to Prince George’s, such as Virginia Beach, that are funded at much lower levels, but that nevertheless outperform Prince George’s, even controlling for race. The real question is whether PGCPS is wisely using the money it has.

* * *

The council members’ insightful commentary and thoughtful public engagement and debate on the issues surrounding the proposed FY2016 public schools budget came as a welcome surprise to many Prince Georgians. The county could use a great deal more of these kinds of debates.

Smarter growth will expand Prince George's tax base

Capitol Heights Metro station is undeveloped. Image from WMATA.

Prince George's County Executive Rushern L. Baker III wants to raise real property tax rates by 16% to increase funding to public schools. The real way to boost Prince George's economy is to develop around its gateway Metro stations near the DC line.

Prince George's is home to the lowest median home values and highest property tax rates in the region, largely because of the low home values in its older, deteriorating communities that border the District of Columbia. Seven of the county's 15 Metrorail stations are in these gateway neighborhoods, but they all are devoid of any substantial transit-oriented development (TOD).

Improving existing home values will strengthen the tax base

Like many other suburbs, Prince George's County has historically been a bedroom community. The county's largest source of tax revenue comes from real property taxes, and 61% of taxable real estate is residential property.

It stands to reason, then, that even small increases in existing home values in the county would go a long way to raise revenues even without any major large-scale development.

Currently, median home values in the five Prince George's county subdivision areas bordering the District of Columbia fall 10-31% below the countywide median value of $269,800. If existing home values in these areas simply rose to that level, the county's taxable real estate base would increase by approximately $2.47 billion. That would add approximately $23.7 million annually in revenue to the county.

Of course, if the county got serious about developing the seven Metro stations located in these struggling communities (Capitol Heights, Addison Road, Cheverly, Southern Avenue, Naylor Road, Suitland, and West Hyattsville), real property revenues would soar much higher than the median.

Undeveloped transit station areas undermine economic growth

Shockingly, Prince George's current General Plan doesn't recommend any substantial growth around six of the seven Metro stations near the DC border over the next 20 years. (The Suitland station, next to the U.S. Census Bureau, is the exception.) Indeed, the county's planners believe there are currently "too many" Metro stations in the county and that developing all of them would "undermine economic growth."

More specifically, planners say that the six gateway Metro stations bordering DC, plus the four stand-alone MARC stations, plus all the planned stand-alone Purple Line stations should only account for 15% of the county's future growth in the next 20 years. That equates to fewer than 600 new housing units per transit station.

By contrast, the General Plan recommends putting 30-40% of the county's projected growth and development over the next 20 years—or up to 25,000 new housing units—far away from transit and mostly outside of the Beltway. This recommendation appears despite county-funded research that concludes that failing to focus on TOD puts the county "at a continued disadvantage relative to its neighbors."

Prince George's has continually squandered opportunities to focus its attention on revitalizing its neighborhoods inside the Beltway. Continuing to encourage scattered development away from transit has crippled the county financially, environmentally, and aesthetically.

Gateway communities can't wait 20 more years to redevelop

Old Central Ave at Southern Ave SE. Image by author.

The close-in Prince George's neighborhoods and Metro station areas near the DC line are likely the first thing the region's current and prospective residents think about when determining whether they would like to live and work in the county.

Until Prince George's County improves its gateway neighborhoods, it will be difficult for it to attract the region's best and brightest. The county can't wait another 20 years for that transformation to happen.

County executive Baker is rightly concerned with diversifying the county's revenue base, creating more jobs, and expanding the county's commercial tax base. To that end, he has advocated strongly for developing the end-of-line Metro stations at the Beltway's edge.

For example, he's called for the FBI to relocate its headquarters to Greenbelt Metro, for the state housing agency to relocate to New Carrollton Metro, and for a new regional medical center to come to Largo Town Center.

Likewise, the General Plan's strategy to direct 50% of future growth to the seven largest Metro stations (including the three mentioned above) plus National Harbor, and to create three "downtowns" at Largo, New Carrollton, and Prince George's Plaza, is sensible.

Still, the county's economic development strategy should also reach beyond downtown, and deeper inside the Beltway, to the neighborhood Metro stations near the District's edge. Most of the new development that the General Plan currently contemplates for outer-Beltway suburbia should instead be directed to these gateway areas.

Prince George's County cannot simply tax itself out of its last-place position in the region. Instead, its leaders need to become better stewards of the public's trust and the public's resources. The county's transit-rich gateway neighborhoods are economic engines ready and waiting to be fired up, but county leaders have to ignite the switch.

Prince George's must get serious about revitalizing its old streetcar suburbs. These vital neighborhoods can't be left to languish for another generation.



(This article is cross-posted on Greater Greater Washington.)

Prince George's Doesn't Need Higher Taxes to Fund Its Schools

Prince George’s county executive Rushern Baker’s recent proposal to raise the county’s base real property tax rate by 16% has created quite a buzz among residents and the county council…kind of like the buzz that accompanies a plague of locusts.

Many citizens and even a state senator have expressed outrage over what they believe is Baker’s brazen and unlawful attempt to circumvent a voter-imposed property tax cap known as TRIM, which was added to the county’s charter in 1978 and which remains exceedingly popular among the electorate. Under TRIM, any property tax increase must be submitted to the voters for approval.

Prince George’s County already bears the heaviest property tax burden of any suburban jurisdiction in the Washington metropolitan region, and it has the least to show for it. Yet, Baker argues that county residents should pay even more taxes next year, so that the county can fully fund the school district’s proposed FY 2016 budget, which requests an additional $133 million in county funding over the current year’s budget. That equates to a 21.1% increase in county funding to support a proposed 7.6% increase in the school district’s budget.

Baker is betting that his “let’s educate our children” argument will eventually persuade a wary public and council to support his move. But raising taxes to increase school funding isn’t the right move for Prince George’s County at this juncture.

High Tax Rate + Low Tax Base = A Bad Combination

In the chart linked below, I calculated “effective real property tax rates” for 10 county-equivalent jurisdictions in the Washington, DC metropolitan region, as well as for my hometown of Virginia Beach, VA. I also calculated values for each jurisdiction’s assessable tax base per capita and per household. (The methodology for these calculations is described in the endnotes on page 2 of the chart.)

Assessable Tax Bases and Rates in Metro DC. Click to download chart.

Prince George’s current effective tax rate is $1.377 per $100 of assessed value. That includes a $0.96 base rate, plus $0.112 in mandatory state assessments, plus $0.305 in mandatory assessments for two bi-county agencies operating in Montgomery and Prince George’s counties: the Maryland-National Capital Park and Planning Commission (M–NCPPC) and the Washington Suburban Transit Commission (WSTC).

The additional mandatory environmental fees that Prince George’s charges for stormwater and solid waste management and watershed restoration are not included in the effective rate, because those fees are not assessed based on property value. This is essentially another end-run around the TRIM property tax cap because, in most other jurisdictions, these types of environmental costs are typically paid for out of the general property taxes collected.

County executive Baker’s proposal would raise Prince George’s current base rate by $0.15, from $0.96 to $1.11. That’s a 16% increase, which would result in an effective tax rate of $1.527—by far the highest property tax rate in the region. By contrast, Montgomery County’s current effective rate is $1.120, which includes the mandatory state, M–NCPPC, and WSTC assessments. Arlington County’s current effective rate is only $0.996—the lowest in the region.

Although it is the wealthiest majority-black jurisdiction in the United States, Prince George’s has the lowest assessable tax base in the Washington region, whether measured on a per capita or per household basis. That’s because the county has the lowest property values in the region—values that have sunk even lower in recent years, in the wake of the Great Recession and the ensuing foreclosure crisis. Prince George’s also has the lowest median household income of any suburban jurisdiction in the Washington region.

As detailed in the chart linked below, Prince George’s County has the worst wealth-to-tax rate balance of any suburban jurisdiction in the region. (The District of Columbia technically has a heavier overall wealth-to-tax burden; however, it shifts the bulk of that burden onto commercial property owners, not homeowners. That makes it somewhat of an anomaly in the region.)

Wealth-to-Tax Balance Rankings. Click to download chart.

Rushern Baker’s proposed 16% increase in real property taxes would still leave Prince George’s County as the least wealthy jurisdiction in the region. Such an increase could also cause some residents to flee the county for neighboring jurisdictions, or dissuade others from moving into the county.

While there may well be occasions when the county may need to raise taxes for the greater good, even if it risks alienating some people, now is not one of those times.

More Money ≠ Better Schools

The county executive’s basic premise for proposing a tax increase—that the school system budget needs to be significantly increased to ensure educational success—is dubious at best. According to data compiled by the Maryland State Department of Education, Prince George’s already pays its teachers higher than the statewide and national averages, and has higher per-pupil expenditures than the statewide and national averages, ranking within the top third of Maryland’s 24 jurisdictions in these areas.

The county’s overall education spending relative to its wealth is also well above the statewide averages. (Again, Prince George’s is not a “poor” county; it’s just not as wealthy as others in the Washington region.) So it can hardly be said that Prince George’s County is giving its public school students short shrift at its current funding levels.

Moreover, there are public school systems out there that are funded at much lower levels than Prince George’s, which nevertheless manage to perform exceptionally well. I am a product of one of those systems: the Virginia Beach City Public Schools. I use Virginia Beach as a comparator here because it has similar physical and wealth characteristics to Prince George’s County.

Both jurisdictions are geographically large bedroom communities, with similar population densities. They are both outside of and larger than their respective metropolitan region’s central city, and they are both principally suburban in character. Virginia Beach has a lower median household income and a slightly lower median home value.

As detailed in the chart linked below, Virginia Beach has a significantly lower per-pupil expenditure rate than Prince George’s and also pays its teachers significantly less. Yet, it has higher student achievement levels, a higher on-time graduation rate, and a lower dropout rate:

Comparison of Prince George's and Virginia Beach School Districts. Click to download chart.

Additionally, even though the Virginia Beach school system receives a much greater share of its overall budget from the local government, the city’s effective real property tax rates are still significantly lower than Prince George’s: $0.93 in Virginia Beach vs. $1.377 in Prince George’s.

Virginia Beach's city manager is proposing a $0.06 real estate tax increase in for FY2016—to maintain, not increase, the school system's current funding levels and other city service levels. But Unlike Prince George's, that proposed increase would still leave Virginia Beach with the lowest taxes in the Hampton Roads region.

Virginia Beach’s example demonstrates how and why Rushern Baker’s argument that Prince George’s County needs to dramatically increase its property tax rate to increase school funding rings quite hollow. At the very least, the county executive hasn’t articulated a compelling case for such an increase.

In a later post, I will discuss what Prince George’s County really needs to do to ensure greater revenues going forward. (Spoiler alert: it’s not raising taxes.)