Property Tax Cap To Stay At 10% Limit

October 16, 1991|By Adam Sachs | Adam Sachs,Staff writer

Without discussion or public comment, the county commissioners votedunanimously yesterday to retain the cap on annual increases of property tax assessments at 10 percent, the maximum allowed by state law.

No residents attended the hearing, which lasted about two minutes before the vote was called.

The commissioners said they retained the 10 percent cap because lowering it could mean a reduction in revenue for fiscal 1993, which begins July 1. It would be hard to compensate for that loss, because state aid has been cut and revenue from income tax is likely to grow at a slower rate than in recent years, they said.

"Our decision wasbased on what we heard from other counties that set their cap at 3 or 5 percent, then came up with shortfalls they couldn't do anything about," said Commissioner President Donald I. Dell. "We'd put ourselves in a bad position if we decreased it, particularly now. One way or another, we have to get revenue and pay the bills."

Assessments provide the basis for tax bills. To provide relief to homeowners angered by skyrocketing assessments, the legislature in 1990 passed a law reducing the annual cap from 15 percent to 10 percent. The law also permits counties and municipalities to set caps below 10 percent.

The legislation was intended to focus taxpayers' attention on the actions of local governments, which control the amount of revenue collected by adjusting the tax rate. Governments could compensate for lowering the assessmentcap by raising the tax rate.

Higher assessments are phased in over three years, with one-third of the county's propertyreassessed every three years. An assessment is 40 percent of a property's appraised market value.

As an example, assume an assessment on a Carroll home increased from $40,000 to $46,000, or 15 percent, for the first year of the phase-in. The homeowner would be obligated to pay for an increase of up to 10 percent of $40,000, or an assessment of $44,000. Based on the county's tax rate of $2.35 per $100 of assessed property value, the tax bill increase would be $47 less than ifthe cap was set at 15 percent, $1,034 vs. $1,081.

If the county had lowered thecap to 5 percent, the homeowner would save an added $47, paying $987. Such a reduction could cost the county several milliondollars.

Commissioner Julia W. Gouge said the county needs incomefrom property taxes, which account for about 47 percent of operatingbudget revenues, "more than ever" because of the recession.

"Citizens still want services," she said. "To lower our ability to raise revenue would be foolish."

The reduced cap provides relief primarily to homeowners living in areas of rapidly increasing property values. Annual assessments increased by an average of 9 percent in Carroll for fiscal 1992 and by nearly 12 percent in 1991.

Six subdivisionsadopted caps below 10 percent for fiscal 1992. County councils in Howard and Harford are debating whether to raise the cap to 10 percent.

HOMESTEAD PROPERTY TAX CREDIT

County.. .. .. '91 rate...'92 cap... '92 rate...'93 cap

Anne Arundel.. $2.46.. .. 10%.. .. .. $2.46.... .. TBD

Baltimore.. .. 2.89.. ... 4%.. .. ... 2.86.. .. ... 4%

Carroll.. .. ..2.35.. ... 10%.. .. ... 2.35.. .. .. 10%

Frederick.. .. 2.19.. ... 10%.. .. ... 2.27.. .. .. TBD

Harford.. .. ..2.73.. .. ..6%.. .. ... 2.73.. .. .. TBD

Howard.. .. .. 2.45.. .. ..5%.. .. ... 2.59.. .. .. TBD

Washington.. ..2.13.. ... 10%.. .. ... 2.21.. .. ... 10%

TBD

To be determined

NOTE: Caps set below 10 percent don't necessarily translate to lower tax bills; that depends on whether, and by how much, the tax rate is increased

SOURCE: Maryland Department of Assessments and Taxation/CARROLL COUNTY SUN GRAPHIC

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