Council Council adopts 4% cap on assessments

December 22, 1992|By John Rivera | John Rivera,Staff Writer

The County Council, on a 4-3 vote, last night adopted the 4 percent cap on property-tax assessment increases proposed by Executive Robert R. Neall.

In proposing the cap, Mr. Neall said he was trying to provide homeowners with the lower tax bills they expected after voters approved a property tax cap last month.

Although council members seemed bewildered by the numbers, percentages and charts, both promoting and arguing against the assessment cap, a majority -- council members George Bachman, Edward Middlebrooks, Carl Holland and Diane Evans -- agreed with Mr. Neall. Council Chairman David G. Boschert and members Maureen Lamb and Virginia Clagett voted against the bill.

Budget Officer Steven Welkos told the council that Mr. Neall's intention was to provide those who voted for the tax cap with the relief he believes most of them thought they were voting for: tax bills that would not increase more than the rate of inflation.

The tax cap limits the increase in total property tax revenue the county can collect each year to the rate of inflation or 4.5 percent, whichever is less. But it does not necessarily limit individual tax bills.

Under the tax cap as adopted, more than half the county's homeowners would see their individual bills rise more than the inflation rate. About a third would see their tax bills increase by as much as 6 percent because their assessments increased the full 10 percent now allowed under state law.

Mr. Welkos said lowering the assessment cap to 4 percent was the only way to keep the bills of county taxpayers from increasing more than the current 3 percent rate of inflation.

The trade-off is that under Mr. Neall's assessment cap, the property tax rate would go down only 5 cents next year to keep total revenues under the cap, instead of the 9-cent drop the county was contemplating. Mr. Welkos admitted that about 36,000 people whose assessments would increase less than 4 percent would be better off if the assessment cap remained at 10 percent and they received the 9-cent drop in the tax rate.

But about 60,000 would benefit under the assessment cap. And no taxpayer's bill would rise more than 3 percent, he said.

Assistant County Auditor Raymond Dearchs said his office, which advises the council, objected to the lower assessment cap because it interferes with the assessment process, artificially holding down assessments on expensive properties. The 10 percent cap already does that and lowering it to 4 percent would just exacerbate the discrepancy, he said.

In addition, the lower assessment cap would create a windfall for a small number of taxpayers who own expensive homes that have artificially low assessments. Their taxes will be subsidized by the higher tax rate paid by the rest of the county taxpayers whose assessments are flat.

"So most people in the county don't get much credit. Many people in the county don't get any credit at all," Mr. Dearchs said, referring to those whose assessments decrease or rise less than 3 percent.

Robert C. Schaeffer, president of the Anne Arundel Taxpayers Association and author of the tax cap, said he offered to keep the measure off the ballot last spring in a meeting with Mr. Neall, if he would agree to reduce the tax rate by 5 cents.

"Five cents would have kept this whole issue off the ballot," Mr. Schaeffer said. "Mr. Neall . . . refused to consider the matter, so we left and the rest, as we say, is history."

Now, he said, Mr. Neall wants to go back to a 5-cent reduction in the tax rate. "But this time, we want the whole 9 cents," Mr. Schaeffer said.

Several council members expressed concern about the fairness of the assessment cap and appeared to want to find a way to cut taxes for the largest number of taxpayers.

"I want to make sure there's equity," said Ms. Lamb. "I'm concerned with the guy next door. I don't want to subsidize his taxes."

County Auditor Joseph Novotny advised the council that the equity was only possible by leaving the assessment cap at 10 percent and lowering the tax rate the full 9 cents.

But Mr. Middlebrooks, summing up the sentiments of the majority, said he was voting for the assessment cap "based on the knowledge that it will help the most people."

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