The Linowes Plan -- I Reforming the Property Tax

November 25, 1990

Gov. William Donald Schaefer's place in Maryland history, despite his many accomplishments, will rest largely on his ability to enact the far-reaching tax reforms of the Linowes commission. Given the sweeping nature of these tax and spending changes, it will take a determined effort by the governor to win legislative support for these proposals during his final four years in office.

Never has there been such a comprehensive look at Maryland's modern tax system. No one should expect the General Assembly to embrace the changes quickly. But there is compelling logic in the commission's recommendations, which we will examine in detail over the next few days. Today, our focus is on reforming the property tax.

No part of the state's tax structure has come under more heated criticism. While local dependency on the property tax has decreased to well below the national average, unhappiness with this tax led to a voter revolution on Nov. 6.

Home owners perceive the tax as increasingly onerous, intentionally complicated, unfairly administered and discriminatory against first-time home owners and retirees.

The commission agreed with many of these perceptions. It suggested some welcome changes:

* Simplify the way the tax is administered. Assess all property at 100 percent of market value every year. This would make it easy to calculate your taxes and end the inequitable process of assessing comparable property in different years.

* Repeal all caps on assessment increases but adopt two relief measures. First, in hardship cases -- especially for the elderly who cannot pay the taxes on rapidly escalating property values -- defer payments by creating a lien against the property. When the house is eventually sold, the unpaid taxes would be recouped. Second, extend the circuit-breaker relief program to all low-income renters, not just the elderly.

* Eliminate lump sum payments of property taxes, which can create a monumental burden. Instead, let home owners make quarterly or semi-annual payments. This would also apply to real estate closing costs -- a major boon to first-time home owners.

* Cut property taxes by $180 million. New state aid to counties would mean a 74-cent reduction in Baltimore City, 16-cent cuts in Anne Arundel, Harford and Carroll counties, 18 cents in Baltimore County and 12 cents in Howard County. After the first year, local councils could again raise the tax rate -- but at considerable risk.

These steps would eliminate much of the property tax furor. Other Linowes commission proposals to aid the counties would further reduce local dependency on the property tax to pay for schools and road improvements. It would, though, require additional tax measures in other areas. We'll look at the impact on Maryland's sales tax tomorrow.

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