Plan to cut closing costs is in trouble

April 19, 1995|By Larry Carson | Larry Carson,Sun Staff Writer

The Baltimore County executive's much-trumpeted plan to reduce home closing costs by $352 is in trouble because the vast majority of the county's homeowners would pay slightly higher taxes to support it.

A skeptical County Council, urged on by tax protesters and residents who don't like the idea of having $10 to $20 added to their property tax bills, may not be willing to pass it.

"There is no consensus on the council. I think it's real close," said Chairman Vincent J. Gardina, a Perry Hall Democrat.

Baltimore County's 1.6 percent property transfer tax is the highest in the state, and its closing costs are correspondingly high. County Executive C. A. Dutch Ruppersberger III said this is one reason why young, income-producing families are bypassing Baltimore County for Baltimore's outer suburbs and southern Pennsylvania.

"We've got to give an incentive. I'm not going to let this county continue to regress," he said yesterday, predicting victory "once we sit down with each individual councilman."

His plan would exempt the first $22,000 of any home's price from the county's transfer tax. That would lower closing costs by $352 on virtually all transactions.

But without another source to make up for the lost revenue, the county would lose about $3.8 million next year. That's the equivalent of 2 1/2 cents on the tax rate, which is $2.855 per $100 of assessed valuation.

So Mr. Ruppersberger proposed making up the difference by reducing the discount that existing homeowners receive by paying their bills before Sept. 1.

This year he persuaded the General Assembly delegation to approve legislation giving the County Council the power to alter the discount rate. That rate is now 2 percent for those who pay in July and 1 percent for those who pay in August.

That done, Mr. Ruppersberger introduced a County Council bill Monday night that would cut the discount in half. When all the arithmetic is completed, the owner of a $150,000 house with a $1,750 tax bill who pays at the earliest possible date would pay about $17.50 more at the best discount rate.

Administration lobbyist Patrick Roddy said Mr. Ruppersberger's bill is different from a package of four statewide bills passed this year that will shift the closing-cost burden from the buyer to the seller and postpone the payment of property taxes.

"Ours is an actual savings," he said.

County Finance Director James R. Gibson Jr. said the measure would merely bring Baltimore County into line with discounts offered by Baltimore City, Howard and Carroll counties. Anne Arundel County offers no discount.

The proposal is welcome in the business community. "We absolutely feel it's significant," said Michael Gisriel, lobbyist for the county Chamber of Commerce. He credited Mr. Ruppersberger for going ahead with a proposal that's likely to generate opposition. "It took some guts," he declared.

One number that works against Mr. Ruppersberger is that 84 percent of county taxpayers take advantage of the discount.

Among them are the traditional opponents of anything that smacks of higher taxes. John D. O'Neill of Ruxton, president of the Maryland Taxpayers Association, and Harold Lloyd, a leader of Property Taxpayers United, are vehemently opposed to the bill.

Dorothy McMann, president of the Perry Hall Improvement Association, conceded that the change would only cost her $11 a year. She said she might support a limited bill targeted at young, first-time homebuyers, but she resents paying anything to subsidize a wealthy buyer purchasing an expensive house.

L The bill is likely to be a tough sell in the County Council.

"I have grave, serious concerns about reducing the discount because it hits hardest at senior citizens. I will in all likelihood vote against it," said freshman Councilman T. Bryan McIntyre, who represents the county's northwestern areas.

Fullerton Democrat Joseph Bartenfelder said he's leaning against the bill, too.

"I don't like the bill," Dundalk Democrat Louis L. DePazzo said yesterday. "It's clearly a tax increase."

Democrat Kevin Kamenetz, who represents Pikesville and Randallstown, disagreed with those who call the bill a tax increase in disguise. He said the county has the right to change its discount, although he worries about the combined effect of the Ruppersberger bill and the new statewide closing-cost laws.

Catonsville Democrat Stephen G. Sam Moxley said he supports the measure. "All in all, it's at least a move in the right direction. We're not raising taxes," he declared.

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