Property tax values mainly unchanged

December 31, 1993|By Larry Carson | Larry Carson,Staff Writer Staff writers Eric Siegel and Dennis O'Brien contributed to this article.

The recession brought some good news to many Maryland homeowners this week for the second year in a row -- property tax assessments that were, on average, unchanged.

More than half of the 635,000 notices mailed statewide show no change or a decrease from 1990 property values, state assessment officials said.

Another 20 percent showed increases of less than 5 percent. Those increases will be phased in over a three-year period under Maryland's triennial assessment program.

One-third of Maryland's homes were reassessed this year, and statewide, the average valuation was unchanged. That's down from an average 0.6 percent increase for properties reassessed last year.

By way of comparison, the average increase in 1991 was 7 percent, and in the boom year of 1984, the average increase was 17.3 percent.

Lower assessments mean lower property tax revenue, which will increase the pressure on many cash-starved local governments to raise property tax rates, cut services or find other sources of revenue.

In Baltimore County, 49 percent of the 91,000 eastern properties reassessed this year were unchanged or declined in value. Most the increases were under 3 percent. Only the western third of the county has not been reassessed since the recession hit the real estate market in 1991.

Baltimore County Budget Director Fred Homan said the 0.8 percent average increase overall in the eastern section this year was lower than he expected and could result in $1 million or $2 million less in property tax revenue for the budget year that begins July 1.

"The largest impact will come in '95 and '96," he said, after the western third of the county is reassessed.

Baltimore City's average increase was 0.5 percent this year, compared with 0.7 percent last year. But city budget analyst Doug Brown cautioned that the assessment figures do not take into account the effect of appeals, which are likely to more than wipe out any increase.

"When you add in appeals, we're going to be down," he said.

City faces shortfall

Earlier this year,, city budget officials reported that the assessed value of property in the downtown area declined by $18 million because the recession had lowered office occupancy rates. Because of that decline, the city is facing a $3 million budget shortfall this year, they said.

In Anne Arundel County, which posted an average assessment increase of 1.8 percent last year, the average assessment dropped by 0.5 percent this time.

Fred Lickteig, an Anne Arundel budget analyst, said the county had been anticipating a minimal increase in the tax base and should not be hurt by the small decline. He said that a 1990 tax cap tying county revenue increases to the Consumer Price Index will prevent significant spending increases. The CPI is hovering at about 1.8 percent, he said.

The recession has made irrelevant the local assessment caps adopted in 1990 by politicians eager to defuse voter anger over 1989's sharp increases.

The General Assembly enacted a 10 percent cap on assessment increases but allowed local jurisdictions to adopt even lower ceilings. The caps effectively limit the amount of additional tax revenue counties can collect automatically -- without raising the tax rate -- strictly as a result of inflation in home prices.

Even Talbot County's zero-growth cap will have no effect this year, because the average assessment there dropped by 2.4 percent, the sharpest decline in the state.

Legacy of the boom years

The caps are still having a holdover effect on revenue from assessments in years when the real estate market was booming. Baltimore County, for example, would collect an additional $11.4 million in property tax revenue next year if its 4 percent cap did not exist.

Although assessment officials attribute the two-year downward trend to the recession's effect on real estate prices, Baltimore County tax rebel David E. Boyd of Property Taxpayers United wants to claim at least part of the credit.

"I think our group has been very much responsible for keeping the assessments down, especially with an election year coming up," he said yesterday.

Maryland Assessments Director Lloyd W. Jones said in a letter to Baltimore County legislators that "the overwhelming majority of homes continue to sell for amounts above our appraised value, clearly showing properties are not overassessed."

There is no doubt that the recession is continuing to take its toll on real estate prices.

Even fast-growing Harford and Howard counties were affected. In Harford, where last year's assessments rose 1.7 percent, the increase this year was only 1 percent.

In Howard, where assessments rose 2 percent last year, the increase this year was only 1.2 percent. In Carroll County, the rate of increase dropped from 3 percent last year to 0.6 percent this year.

Allegany and Washington counties in Western Maryland had the healthiest growth rates, while Talbot and Montgomery counties decreased the most statewide.

Assessment supervisors in the far western counties had no explanation

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