Start-up costs likely to sideline property tax bill Proposal would offer home buyers a break

January 25, 1992|By David Conn | David Conn,Annapolis Bureau of The Sun

ANNAPOLIS -- The lawmakers who listened to testimony yesterday about a bill to allow the semiannual payment of property taxes seemed sympathetic to its supporters.

But in the end, the counties and municipalities, which would have to pay hundreds of thousands of dollars to switch to a semiannual tax-payment system, were confident their opposing arguments would prevail for the third year in a row.

The bill, sponsored by Sen. Nancy L. Murphy, D-Baltimore Co., would give home buyers the choice of defering for six months half of the 12- to-14 months of property tax they must now pay at settlement. Those costs can run as high as $2,000 for a $120,000 house, according to the Greater Baltimore Board of Realtors. The bill would not apply to current homeowners, only home buyers.

Although the six-month delay would help home buyers initially, it would cost them more in the long run because of interest fees and extra administrative charges the counties would collect.

Under the current system, local jurisdictions also collect property taxes for the state.

But faced with the highest closing costs in the nation, Maryland home buyers deserve the option of getting some relief to help them over the high financial hurdle of a house settlement, Ms. Murphy said at a hearing yesterday.

"I think we're dealing with intelligent people who can deal with a business decision," she told her fellow Budget and Taxation Committee members. "And it's optional. It's not mandatory."

Ms. Murphy's bill, which was consigned to summer study last year, is similar to one sponsored by the state Department of Housing and Community Development. That bill, part of a goal specifically supported by Gov. William Donald Schaefer in his recent State of the State address, would allow all current homeowners to switch to a semiannual payment, not just home buyers.

Opponents of the measure, including the Maryland Association of Counties and the Maryland Municipal League, argued that they simply can't afford to make the change now.

MACO has calculated that Ms. Murphy's bill would cost the counties about $34 million initially in administrative and interest costs. Even though the counties would be authorized to make up that money by adding administrative costs and interest, it simply isn't there in the short run, they said.

"You're asking us to spend new money in a year when we're not fulfilling our traditional mandates," said Patrick Roddy, Baltimore County's director of legislative relations.

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