Anne Arundel County Executive John G. Gary is contemplating a 3-cent rise in the property tax rate, an increase permitted under the tax cap, council sources said.
The increase would cost the average homeowner $46 per year and add $4 million to the county budget.
In the past two weeks, budget officials have met with council members to explain why the increase is needed for the first time in more than a decade. They say assessments that are not keeping pace with inflation mean a loss in potential revenue unless the tax rate is raised.
Council members have received a memo detailing 11 reasons why the tax rate should be $2.38 instead of the current $2.35 per $100 of assessed valuation. The 3.4 percent increase in the average tax bill -- caused by the 3-cent rise in the tax rate and slightly higher property assessments -- would equal the local rate of inflation, the memo pointed out.
Though tax watchdogs might protest the move, Robert C. Schaeffer, the father of the tax cap, said he has no complaint with the proposed rate increase. The tax cap limits the rise in total property tax revenues each year to the rate of inflation, but the increase may not exceed 4.5 percent.
"They're playing within the rules," Mr. Schaeffer said. "Having set up the playing field, I guess we shouldn't move the goal posts after the game has started."
He pointed out that Mr. Gary's proposed $732.2 million operating budget for fiscal 1996 represents only a 2.4 percent increase over this year's budget. "If the budget has increased less than the rate of inflation, I'd have to say we won," he said.
Financial officer John R. Hammond would not confirm Mr. Gary's intention to raise the property tax rate to $2.38. The final decision will not be announced until Mr. Gary unveils his budget May 1.
The tax cap has forced decreases in the tax rate in the two budgets passed since the cap was adopted in 1992. That was because assessments increased more than the rate of inflation. This year with inflation at 3.4 percent and assessments rising by only 1.9 percent, the increase became necessary just to keep pace with inflation.
By not raising the tax rate, the county would lose $4 million in revenue in fiscal 1996, which begins July 1. That $4 million would be lost from the tax base forever because of the cap.
The question now is whether the County Council, which must approve Mr. Gary's budget, has the political will to vote for the increase. Four of the council's seven members are Republican, and the Democrats tend to be fiscally conservative.
"I understand assessments are down and that's taking revenue away from the county," said James E. "Ed" DeGrange, a Glen Burnie Democrat and businessman. "At this time, I'm not convinced of [the need for] any tax increase. . . . It's going to be up to the administration to do a good job selling it if that's what they propose to do."