Baltimore Mayor Brandon Scott will announce his plan to lower the city’s property tax rate on homeowners to under $2 by 2028 in his State of the City address on Monday.

The proposed reduction, which was released as part of a preview of the upcoming speech, would be the city’s first property tax relief since Mayor Stephanie Rawlings-Blake introduced the 20 cents by 2020 tax credit program. City property owners currently pay a levy of $2.248 for every $100 of assessed value.

Scott, a Democrat beginning his second term, did not say how far below $2 he is aiming to set the rate, nor did he offer details about how the rate decrease would be implemented, other than to say it would be graduated. Scott said he believes the city’s budget can withstand the reduction without increases to other city taxes.

“Everything we’re doing we know the city can handle financially,” he said.

The announcement comes, however, as city budget officials have been warning of financial uncertainty ahead. Scott’s proposed $4.6 billion budget for fiscal year 2026, which must still be considered by the Baltimore City Council, includes increases in fees and fines and other provisions to help close an $85 million gap between revenues and expenditures.

Budget officials project the current fiscal year, which will end June 30, will finish about $8 million in the red. City officials will have to find money to make up the difference, as law requires a balanced budget.

Scott’s proposed budget for next year does not account for volatility in the city’s income tax revenue that could come as a result of federal workforce cuts. Budget officials said between $3 million and $5 million could be on the line as the Trump administration slashes jobs, including many held by Baltimore residents. City officials know of at least 12,000 federal employees who work in Baltimore. Others may be teleworking or commuting, officials said.

Asked if decisions made on the federal level threaten plans for a tax decrease, Scott said the Trump administration is a threat to the way of life for all Americans.

“We have to do what we have to do locally, but we also have to keep an eye out,” he said.

Many Baltimore homeowners are already effectively paying a tax rate equivalent to $2 on every $100 of assessed value by claiming the Targeted Homeowners Tax Credit, which was implemented by Rawlings-Blake.

City officials said the proposed rate relief will be on top of the reduction that residents receive via the tax credit.

Scott has faced heightened pressure to adjust the city’s property tax rate, the highest of any jurisdiction in the state. Last year, Renew Baltimore, a group of economists and former elected officials, petitioned city voters to place a question on the ballot in November’s election that would have shaved the city’s property tax rate over seven years to $1.20. Backers of the group argued the proposal would help to reverse decades of population decline, bring in new investment and lower crime, jump-starting the economy and counteracting losses to city revenues.

The Baltimore City Board of Elections rejected the petition, finding it violated Maryland law. The state’s highest court concurred, finding the question would strip power away from city leaders. The court barred the question from appearing on city ballots.

Property tax revenues in Baltimore have increased over the last few years, coming in over budgeted projections. For fiscal year 2024, Baltimore collected $16.3 million more in property tax than anticipated. The overage, along with higher-than-expected income tax revenue, was used to help balance the budget that year, which ran over on costs for the fire, health and public works departments.

Scott will deliver his State of the City address at 6 p.m. Monday at the M&T Exchange. The speech will be broadcast on CharmTV.