Hopefully, city will see the light on bonding proposal Westminster residents would be grateful for a tax break next year


May 10, 1992|By Edward H. Shur

A year ago, Westminster Mayor Ben Brown wanted to chop 8 cents off the 91-cent tax rate.

The City Council refused, passing a budget retaining the rate of 91 cents per $100 of assessed value.

It was just another in the continuing battle between the mayor and council.

But the mayor held firm, vetoing the budget.

Then came the city election, and three new council members were elected.

The new five-member body lowered the tax rate.

That gave the owner of the average $134,000 home about a 9 percent ($42.88) break on city property taxes.

So even though property assessments rose about 8 percent, city taxes actually declined about 1 percent ($4.76).

In addition, good financial planning allowed the city to carry over $1.1 million to be used to finance additional office space and a new police station. City coffers now have about $1.7 million set aside for those projects.

His honor originally proposed an 8-cent decrease in the property tax rate for fiscal 1993, which begins July 1. He proposed selling bonds to finance the new $1.2 million police headquarters, tentatively slated for the former Westminster Auto Parts store.

That, he says, would allow the council to drop the tax rate to 75 cents from the current level of 83 cents.

That would cost the city about $214,400 in lost revenue and is 2 cents below the fiscal 1993 constant yield of 77 cents.

It would save the owner of that average $134,000 home about 8 percent ($35.59).

Since city property assessments are rising an average of 8 percent, the net result would be a real no increase in city property taxes.

Unfortunately, the City Charter mandates the tax rate be set by ** the end of May, and the council is unlikely to have the appraisal of the store and the purchase commitment in hand in the next three weeks.

Without that work completed, the city can't commit to bonding ** and therefore can't lower the tax rate, the mayor and council members agree.

"I don't see any way to deal with a tax cut now," Brown said. "If we bond, the balance would carry over and not be spent.

"I'm looking toward next year, so that if we don't spend the money on Westminster Auto Parts, at least half the savings could come back to the taxpayers next year."

The majority of the council -- Steve Chapin, Rebecca Orenstein and Ken Yowan -- supports the mayor's proposal to sell bonds. That follows statements the three made as candidates at a forum a year ago.

"Bonds spread out the cost so new residents have to pay their fair share," said Chapin, chairman of the Finance Committee. "Bonding's the way to go."

Orenstein agreed, "Because that's how I handle my own money and mortgage."

As to the possibility of cutting the tax rate, Chapin said that would require study.

"A lot would depend on what the bonding house would like to see," he said. "I'm not ruling it [a tax cut] out or in."

Yowan said that once the city gets an appraisal and commitment, "I probably would be open to cutting the rate, although I'm not sure of the specific amount."

Orenstein "would be agreeable to take a look at that since it's city money and it's burning a hole in our pocket. Let's try to put it back in the public's pocket."

She would like to discuss specific amounts with Finance Director Stephen Dutterer, "who was a mentor to us in the first budget process."

Council members Ed Calwell and William Haifley are on the record as opposing the bonding method and cutting the tax rate.

"You end up spending twice the amount when you don't have to," Haifley said about bonds, calling a pay-as-you-go policy more fiscally conservative.

But financial experts like William Kelly, senior vice president of Ferris, Baker, Watts, and Sam Fales, vice president and co-manager of the municipal bond division of Legg Mason, have said bonding is fiscally prudent.

"It may double the cost, but if you kept the money in the bank you still could come out with positive cash," said Fales. "Why spend your cash? It's hard for municipalities, so many are having difficult times.

"The city could be ahead of the game by keeping its money. I think it's more conservative to keep your cash and borrow at these lower rates."

And Kelley has said this is a better time for a bond issue "than it's been for a long time because interest rates have declined appreciably."

Carroll's commissioners have been following that advice.

They reversed the previous boards' pay-as-you-go policy and are bonding more capital projects. And the county's bond rating remains high.

Hopefully, the city will see the light.

And in terms of the tax rate, Westminster residents would be grateful for a break next year -- especially after the massive jolt our wallets are getting as a result of the huge increase in state taxes.

What's your opinion? Please send your comments to Letters or Guest columns, The Carroll County Sun, 15 East Main St., Westminster, Md. 21157-5052; fax: 876-0233.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.