Even if the economy grows at a reasonable rate, the city of Baltimore is on a path to financial ruin, according to a report presented to the city council by the Philadelphia-based Public Financial Management Inc.
With Baltimore's population and investments plummeting, and poverty and unemployment skyrocketing, the city is expected to go bankrupt within a decade, the report said. The city will accumulate $745 million in deficits over the next 10 years because of a widening gap between revenues and expenditures.
When factor such as the costs of infrastructure needs, pensions and retiree health care are taken into account, the problem looks even worse — the total shortfall reaches $2 billion by 2023, the report found.
Mayor Stephanie Rawlings-Blake, a Democrat, said tax increases are not part of her plan to stave off bankruptcy. Baltimore's property tax rate is twice as high as any other in the state, and its income tax is at the maximum level Maryland allows, The Sun reports.
The city's population has dropped from a peak of 950,000 in 1950 to 619,000 today. The median income is $40,000, and 22 percent of the city's residents live in poverty, according to Census data. The city also has 16,000 vacant properties, the Associated Press reports.
"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," Andrew Kleine, the city's budget director, 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 has drawn up budget reforms, including a restructuring of retiree healthcare, that will be unveiled next week.
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