Although Howard County is faced with a growing budget deficit, the County Council early today capped residential property tax assessment increases at 5 percent a year, risking the loss of $1.2 million in revenue.
Meanwhile, Anne Arundel Council members voted unanimously last night to establish a 10 percent assessment cap after lengthy discussions about having the state place their "backs to the wall."
The state legislature this year adopted a bill that lowered the limit on annual assessment increases from 15 percent to 10 percent, but allows individual jurisdictions to adopt an even lower cap. The deadline for setting the cap is Dec. 31.
Howard Council members voted 4-1 in an emergency legislative session to adopt a bill sponsored by Councilman Charles Feaga, R-5th, that caps assessment increases at 5 percent. The measure could mean smaller tax bills for 30,472 county property owners.
The council rejected an amendment by Councilman Darrel Drown, R-2nd, to limit increases to 6.2 percent a year and turned down a bill by Councilwoman Shane Pendergrass, D-1st, to place the ceiling at 10 percent.
Councilman Paul Farragut, D-4th, said he initially had reservations about the 5 percent cap because it appeared to be a regressive tax.
But County Budget Administrator Raymond S. Wacks testified at a public hearing hours before the council vote last night that it was not. He said wealthier homeowners would not derive greater benefits from the cap because their property values have risen more slowly than moderate-priced homes in recent months.
Wacks said the administration of County Executive Charles I. Ecker believes the bill is a "truth in taxing" measure, and that the county could regain the $1.2 million revenue by raising the $2.45 tax rate. He said each 1-cent increase in the tax rate next year would generate $500,000 in revenue.
Council Chairman C. Vernon Gray, D-3rd, was the only member who voted against Feaga's bill. He said the move to strip the government of revenues could lead to slimmer general fund budgets and reduced services at a time when the county is experiencing "a hemorrhaging deficit" now projected to reach $20 million this year.
"We may see an average of a 10 percent reduction [in the budget] the next four years," Gray said. "We have to be prepared not to add to the school board's budget."
Pendergrass said she expects the cap and the county's $20 million budget shortfall will prompt Ecker to raise taxes next year.
The 5 percent tax cap met stiff opposition from civic and business groups in the public hearing last night. Representatives from the County PTA Council, the County Chamber of Commerce and the county chapter of the League of Women Voters all favored the 10 percent cap.
"People are very concerned about what's going to happen with the education budget because of the deficit that we're experiencing," said Lynn Benton, the PTA's budget chairwoman.
In Anne Arundel, new councilman Edward Middlebrooks, D-2nd, voiced strong opposition over having to make a decision on the )) property tax cap so soon after being elected.
"I have a problem saying we're offering relief," Middlebrooks said. "I don't think we're doing anything to provide the citizens with tax relief. I have a problem saying we want to live within 105 percent but that our leeway is 110 percent."
Councilwoman Diane R. Evans, R-5th, another new member, urged her colleagues to remember that if necessary the council can come back next year and change the cap on assessments.
Council members tossed around the idea of calling a special session on Jan. 1 to decide on the cap, or even not making any decision.
However, it was not clear what the state might do if no decision were made. There is no penalty provision in the law in case a jurisdiction does not set a cap.
Both Baltimore City and Baltimore County have adopted 4 percent caps on assessments. Harford has adopted a 6 percent cap. Carroll, Prince George's and Montgomery counties all have adopted caps of 10 percent.
Last night's passage of the 10 percent cap marks the first major bill to be submitted by new County Executive Robert R. Neall.
One of Neall's campaign promises was to hold to a 5 percent cap on yearly increases in property tax revenues. Neall aides have said that even with the 10 percent cap on assessments it is possible for Neall to keep his promise by making changes in the tax rate, if necessary.