A Transfer Takes The Wrong Route

COMMENT

April 04, 1993|By MIKE BURNS

The long nurtured transfer tax proposal is coming to the finish line Tuesday before the County Council, promising to buy new schools and green pastures for Harford County.

A lot of time and effort has gone into this proposal. But it's an idea that should be killed outright. Not because the realty brokers and the development lobby and the Chamber of Commerce oppose it. Not because of the county school board's historic, but hardly heroic, action to directly ask the council to approve it, giving the board more money.

The real reason is that there are far better, more equitable ways to finance farmland preservation and school construction: Raising the general property tax a few pennies so that all would pay for these common amenities. Allowing farmers to sell the "development rights" on their land in the open market (with the county taking a piece of the capital gains to fund the schools). Financing the projects out of the general fund, and adding a higher piggyback rate on the state income tax, as other counties have done.

T-tax supporters, including County Executive Eileen M. Rehrmann, like the idea of earmarking funds for projects because it doesn't affect the general budget. These projects avoid a property tax hike: Mrs. Rehrmann's latest county budget again boasts of no increase in the tax rate of $2.73 per $100 of assessed valuation.

They also like the idea of county control over development values of farms. Of course, the county (and chartered towns) would determine where these development rights could be used, would control zoning categories, and would dictate fees for utility hookups, roads and other developmental construction.

The council is believed to be evenly divided on the issue; the vote could go either way. A lot of people view this tax decision as a vote on the Rural Plan. It is not. The plan has already passed. But it needs a passel of laws to make it work, such as a way to pay for it.

Enter the transfer tax.

The problem is that the T-tax had to be developed long before the county even decided whether to adopt a Rural Plan.

The county administration had to ask the Harford legislative delegation last year to sponsor a bill in the General Assembly to allow the county to impose the tax. That bill in Annapolis specified its maximum rate (1 percent), as well as its specific use and the means of paying out the funds to farmers. It was passed.

Harford voters then had a chance last November to authorize the unequal installment payments of funds to farmers, under a 20-year bond program. Voters approved that charter amendment, but the language on the ballot specified that a transfer tax would be the primary source of funding the farmland preservation program.

More than two-thirds of the county voters approved that legal subtlety, which was seized upon as mandate for the transfer tax -- even though no other funding mechanism was put to a vote. The tax is expected to raise more than $4 million in the first year, split between schools and farm development easements. It's small change for the school budget, but the only revenue for rural preservation.

However, even the most optimistic projections fall short of the original goal of preserving 30,000 acres of farmland. And what usually happens is that the fields least desirable for development are the first on the sign-up sheet.

Under the voluntary program, even the most productive farmland may be sold for development. Farmers who want to donate preservation easements to the state or to conservation organizations may always do so (although they won't get paid for it).

Since the government and private industries are selling pollution-rights permits on the open market -- the Chicago Board of Trade began trading in those permits last week -- there is no reason why Harford farmers couldn't sell their development rights in a similar manner, especially because the administrative costs of the farmland program are said to run as high as 40 percent of the outlay.

Opponents of the T-tax are correct that it raises the cost of buying a home, or selling a home. The hardest impact will be on first-time homebuyers, who are scraping to find the cash to settle on a home.

But with the average Harford house selling for less than $120,000, the gross tax would be only $1,200 or less. That tax is typically split between buyer and seller, so the buyer would face a $600 tax. Besides, there is a $300 exemption in the law for the buyer, so her net T-tax burden would be only $300. Baltimore city and other area counties (except Cecil) already have a transfer tax; most are not earmarked for a special program.

Given the higher prices of homes in those areas, a modest transfer tax in Harford will do little to erode its reputation for affordable housing.

The point is that Harford citizens as a whole (including those who buy a new home) should pay for schools and bucolic greenery. They should not seek to transfer that civic responsibility.

Mike Burns is The Baltimore Sun's editorial writer in Harford County.

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