Crofton's special tax district could nearly eliminate local propertytaxes by becoming an incorporated city or town, according to a University of Maryland study.
But more than $800,000 in state money andlocally generated funds that would flow to the new town would come directly out of county coffers -- a shift that may make incorporation politically difficult, the report cautions.
"The county, having already been hit hard by cuts in state-sharedrevenue, may find it difficult to endorse an incorporation that reduces county revenue while permitting the district to cut its tax rate,the report says.
But the nine-month study, completed by the Institute of Governmental Affairs at the university's College Park campus,recommends that the special tax district keep its current 29-cent tax rate even if Crofton officials move ahead with incorporation.
That way, Crofton could use additional revenue generated through incorporation for other services. "Indeed, government can be enhanced but not be made more expensive," the 43-page report says.
The study, commissioned by the Crofton Civic Association last June, does not reachany conclusion about whether the special tax district and its 10,000residents should become a city. Instead, it details the financial benefits and pitfalls of incorporating.
Last night, residents got their first look at the report at a special meeting at the Arundel FireHall. It will be up to association board members, residents and the County Council to decide if Crofton should change its form of government.
To become incorporated, the community must submit a petition with signatures from 25 percent of its residents and win County Council approval. Anne Arundel has only two incorporated municipalities: Annapolis, with a population of about 33,000, and Highland Beach, witha population of 150.
Incorporating would allow Crofton to enact local ordinances, establish business regulations, control land use andreceive state and federal money.
It also would allow the community to write its own laws, set up a mayoral form of government, establish inspection agencies and acquire property through eminent domain.
Crofton could form a limited municipality that gives it all the power of a city but still relies on the county for a number of services,such as fire protection, trash pickup and road repairs.
"A municipality is not required to exercise any particular power, provide any particular service or assume any responsibility for services currently delivered by the county," the report said.
The civic association, which is governed by an elected board with limited powers, must decide if there would be an adequate tax base to provide desired levels of service. While incorporating will make available more grants and state funds, strings attached may not make the money worthwhile.
The report was based on fiscal year 1992 with Crofton's budget of $507,000 and was predicated on maintaining the services the community provides, the most significant a five-member police force that costs about $240,000.
The study says operating an incorporated Crofton wouldnot be expensive, especially if government services remain limited. The only additional cost would be for a planning and zoning commission at $40,000 a year. A desire for local control of planning and zoning is one of the reasons the association is exploring incorporation.
The study also concludes that starting up a city highway departmentcould net the community an additional $200,000 in user revenue from the state. That figure is based on what would be the new city's shareof state highway funds, based on Crofton's 23.82 miles of roads.
The bulk of the more than $800,000 in Crofton's new money under incorporation would come from state-shared income tax revenue, totaling $702,742. The rest would come from business license fees, corporate filing fees, state aid for police protection and $95,000 from an admissions and amusements tax.
Reducing the property tax rate to a half-cent -- generating $7,600 in revenue -- and adding the new money generated by incorporating, Crofton's total budget would have been $886,000 in 1992, $370,000 higher than what was actually budgeted.
But those estimates are based on the county's share of state money at a time when state aid to localities is being sharply reduced. Last October, state aid to local governments was reduced by $180 million, with Anne Arundel losing $17 million.
"Approaching the county for permission to incorporate in this budget-cutting climate strains the prospects for receiving a favorable response," the report says, adding that county may be especially skeptical if it still must provide the community with the services it does now.
"The question raised under these circumstances is what does the county 'buy' with its loss of revenues should it allow the community to incorporate," the study says. "If community services are not expected to change, does the county 'buy' anything?
"Certainly district residents would be better off after incorporation . . . yet other county residents may feel injured by the proposal."
FISCAL 1992 BUDGET COMPARISON
.. .... ....... .... ..... ..... Crofton... ...... Crofton
Revenue....... .......... ... Tax District..... Municipality
Local property tax....... ..... $441,810.... .... $7,617.48
Unappropriated county surplus...... $170...... ....... $170
Community-held surplus...... ... $65,121...... .... $65,121
Local share of state income tax...... --....... $702,741.90
Admissions/amusements tax..... ...... --..... ..... $95,807
State aid for police protection...... --........ $14,872.52
Building and license fees..... ...... --....... ...... $300
Corporate filing fees.... .... ...... --....... ...... $300
Total revenue:........ ... .... $507,101....... $886,929.90
The additional revenue from the local share of state income tax means the current property tax rate could be reduced from 29 cents per $1,000 of assessed value to .5 cents.