Riding Piggyback

March 17, 1995

No politician enjoys raising taxes. But the Carroll PTC commissioners' proposal to increase the state income-tax piggyback rate to the maximum allowable 60 percent is based on sheer necessity, as the county faces a formidable school shortage.

The higher piggyback tax, which would mean an extra $100 in local tax for a person paying $1,000 in state income tax, is preferred by the commissioners over an increase in the property tax rate, which has been stable at $2.35 per $100 assessed valuation since 1990. The reasoning that a property tax increase would hurt fixed-income residents is persuasive, but not totally convincing.

The taxation burden could be more equitably shared, with just cause. A 10-cent hike in the property tax rate would add $100 a year to the levy on a $100,000 house. That would yield about $3 million extra a year.

A more modest increase in the piggyback tax, to 55 percent from the current 50 percent level, would produce an additional $4.5 million annually. It would not hit so hard on the working, income-producing segment of the population.

The commissioners are holding public meetings on the proposal through April, before making a decision on the budget for the fiscal year that begins July 1. The board should consider a more balanced plan to raise revenues, although it is to be commended for seeing the need to go beyond the one-shot, revenue quick fixes that have been relied on of late. Jacking up the impact fee on new homes by $1,800, for example, was supposed to solve the problem, but was woefully inadequate.

Political sentiment plays a major role in the revenue equation. Impact fees are a one-time, real estate purchase cost, which are viewed favorably because they are thought to affect mostly new residents. Piggyback increases are seen as part of the state's income tax burden, not a direct local obligation. Property taxes, on the other hand, are purely local decisions made by elected county officials.

With pressure to build eight new schools in five years and a $4 million deficit next fiscal year, the commissioners need to comprehensively examine county revenue sources. They might do well to take a harder look at a more balanced program, including transfer and hotel-room taxes, rather than placing all their hopes on a piggyback ride.

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