War Over Tax Limit Rages On

New Interpretation Muddles Situation

October 18, 1990|By Samuel Goldreich | Samuel Goldreich,Staff writer

Opposing camps warring over a proposed charter amendment to limit county property tax revenues accused each other yesterday of deliberately misrepresenting how the measure would work.

Meanwhile, all sides in the debate were thrown into confusion by a new interpretation developed by the county. Two previous opponents on the County Council said they might be willing to vote for the tax limit under the new interpretation.

The Office of Budget had assumed that new construction would be included in the measure to limit increases in property tax revenues to 4.5 percent or the rate of inflation, whichever is lower. Officials had projected this would cost the county about $8 million in anticipated revenue next year and more than $118 million over the next five years.

But in an informal legal opinion reported yesterday by The Anne Arundel County Sun, Deputy County Attorney David Plymyer said the measure, if approved by voters Nov. 6, could have far less effect than originally envisioned (see box).

If the county's property tax base grows at its historical average rate of 3 percent, the measure would have very little effect, county Budget Director Marita Brown said.

"What does this mean in the future?" she asked. "Not a whole hell of a lot. What does it mean next year to the average home owner? About $10."

If the tax cap had been in place during the administration of O. James Lighthizer, Brown said, it would have had virtually no effect on growth in the budget, tax revenues or tax rates because of the amount of new construction.

The leader of the group that drafted the measure said yesterday that opposition to the cap has been built around a false sense of fear. Earlier assumptions about losing the opportunity to tax new development were deliberate attempts to undermine voter support, said Robert Schaeffer, president of Anne Arundel Taxpayers for Responsive Government.

"The opponents have always tried to paint the worst face on this thing," he said. "So it's natural that they never sat down and looked at the positive aspects of it."

But several Schaeffer opponents said that he is the one who has flip-flopped in his interpretation of how the measure would work, hoping to allay fears that it would produce large cuts in county services.

Cathy Marx, spokeswoman for Fairness to All County Taxpayers, a group opposing the tax cap, said AATRG's original intent was to produce "major tax reform" through a $30 million rollback to 1989 levels. Even though that provision of the charter amendment was struck down by the Court of Appeals, she warned that a new court test of the measure could mean that Plymyer's assumptions regarding the constant yield are invalid, she said.

"It boils down to should voters vote on something they don't understand," she said. "I'm not sure I'm right. I'm not sure Schaeffer's right. I'm not sure the county's right. I'm not sure anybody's right."

Charles LoCascio, executive director of the county teachers union, shared Marx's confusion, but said the measure should be rejected even if Plymyer is right.

"If indeed this is the case, the measure should be voted down as frivolous," he said.

Meanwhile, some longtime opponents of the measure agreed yesterday that if Plymyer's interpretation is correct, the tax limit would not create the threat to services that they have warned against.

"I think that's what the people want, and I would be inclined to vote for it," said County Councilwoman Maureen Lamb, D-Annapolis.

Councilman Edward C. "Buddy" Ahern, D-Pasadena, agreed. But he said the ultimate solution to tax reform should come from the General Assembly, which he said should freeze assessment increases for seniors and increase the income threshold for home owners seeking tax relief from rapid assessment increases.

But Council Chairwoman Virginia Clagett, D-West River, and outgoing member Michael F. Gilligan, D-Glen Burnie, still oppose the measure, warning that a recession would undermine the county's revenue base.

Outgoing Councilwoman Carole B. Baker, D-Severna Park, the driving force behind FACT, did not return calls yesterday.

Both county executive candidates -- Democrat Theodore J. Sophocleus and Republican Robert R. Neall -- also said their hands should not be tied by constitutional limits on tax revenues. But they both said they would have no problem making any budget cuts that would be necessary if the AATRG measure passes.

*Examining the constant yield How the constant yield affects the proposal to limit growth in county property-tax revenues to 4.5 percent or the rate of inflation: As property assessments increase, the state requires counties to conduct public hearings to justify setting a tax rate to produce more revenue than in the previous year (the constant yield).

But revenue can also increase when the taxable base expands through new construction.

Under an unofficial legal interpretation by the county Office of Law, which pegs the tax cap to the constant yield, the proposed measure would have the following effect on property taxes: * Current fiscal year 1991 tax rate: $2.46 per $100 of assessed value * Current tax bill for a family living in a $109,700 home: $1,102 * Previous estimate of 1992 tax rate, assuming the tax cap would apply to new construction: $2.36; 1992 tax savings for average home: $48; Cost in anticipated revenue to county: $8 million * New estimate of 1992 tax rate, assuming new construction could be taxed under the constant yield mechanism: $2.44; 1992 tax savings for average home: $10; Cost in anticipated revenue to county: $1.5 million* * Preliminary estimate from county Office of Budget

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