Arundel tax measure's impact on costs, savings minimized

October 18, 1990|By Peter Jensen | Peter Jensen,Anne Arundel Bureau of The Sun

ANNAPOLIS -- A new interpretation of a proposal intended to hold down rising property taxes in Anne Arundel County prompted county officials yesterday to question whether the plan would provide voters with any tax relief at all.

The charter amendment, petitioned to the Nov. 6 ballot by the group Anne Arundel Taxpayers for Responsive Government, would limit annual increases in the property tax revenue to 4.5 percent per year or the rate of inflation, whichever is lowest.

Earlier this month, the county's budget experts estimated that the cap would cost the county $118 million over the next four years and force government to make substantial cuts in services.

However, a new interpretation of the tax cap suggests that the cost to county government -- and the savings to taxpayers -- would be "very small," Marita Brown, the county's budget officer, said yesterday.

That's because the proposed property tax limit establishes the "constant yield" tax rate as a base line, according to an "informal opinion" released this week by David A. Plymyer, deputy county attorney.

That figure, established each year by the state Department of Assessments and Taxation, does not include revenue from new construction or property improvements.

In a growing county such as Anne Arundel, revenue from new construction and improvements can be considerable.

If the tax cap is in effect next year, the county would lose between $1 million and $2 million in property tax revenue, said Ms. Brown, who had earlier estimated a first-year loss of more than $8 million.

The proposal "may shave pennies off the tax rate but not much more than that," Ms. Brown said. "All things being equal, the property tax reduction would be negligible."

Robert C. Schaeffer, head of the tax group and the cap's author, said he agreed with Mr. Plymyer's interpretation of the proposal and questioned why county officials had not stumbled upon their revelation earlier.

The tax limitation was modeled after one in the Eastern Shore's Talbot County that specifically exempts new construction and improvements, Mr. Schaeffer said.

"New construction is not factored in the assessable base, and I see no reason that would change," Mr. Schaeffer said. "I don't think there's a controversy."

Nevertheless, county officials say the language remains ambiguous and could potentially be reinterpreted after the election.

"We don't really know how it [the tax cap] should be applied," said Stephen R. Beard, the county attorney. "There's is a still a question in my mind as to what it means."

A proposal to limit Baltimore County's annual property tax revenue increases to 2 percent is not affected by Anne Arundel County's rereading of its plan.

The Baltimore County tax cap does not include any reference to constant yield.

However, officials in Towson continue to scratch their heads over a passage in their proposed tax cap that exempts property taxes collected to pay debt on bonds approved by voters in the past.

The county expects to pay about $55.3 million in debt service for voter-approved general obligation bonds. Baltimore County will receive more than $362 million from property taxes this year.

"Should we extrapolate it [debt service on voter-approved bonds] out when we calculate the 2 percent?" asked Arnold Jablon, the county attorney. "It's mystifying. We could end up back in court because I don't know what it means."

One reason behind some of the confusion is that both Anne Arundel and Baltimore counties' measures were essentially rewritten by the Court of Appeals. The state's highest court struck certain passages it deemed unconstitutional in a Sept. 20 order.

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