End of the real estate gravy train Property assessments: Region's stagnating values leave local governments scrambling.

January 05, 1996

MARYLAND'S LATEST round of real property assessments represents more bad news for city and county budget officials. The average increase of 1.3 percent in property values statewide means that local governments will have to look to other revenue sources to finance their budgets, or make further cuts.

Stagnating property values are the flip side of nearly a half-decade's worth of disinflation. Leading up to the 1990s, local budget officials could count on property values rising at rates that were close to double digits. But in truth, even before the boom '80s, local governments -- especially in fast-growing suburbs -- lived off the fat of rising property assessments.

"Governments had revenues coming in without having to lift a finger," recalls Anne Arundel budget director John R. Hammond.

Officials at the time felt those days would never end. But they have, as the latest figures out of the state Department of Assessments and Taxation clearly illustrate. Property values across the state have shown little or no growth for four years in a row. Baltimore County property owners experienced the largest increase in the region by a hairsbreadth -- 1.6 percent. Baltimore City's increase was 1.3 percent. In Prince George's County, the average assessment declined by a third of a percent.

While homeowners may cheer the end of an era of steeply increasing property taxes, it also means that their primary asset is not appreciating to the degree to which they've become accustomed. People who purchased a home in the last several years and expected to make a killing on a resale will likely be disappointed. On the other hand, the soft local real estate market is more inviting for purchasers, particularly first-time buyers.

With stagnating property values, an uncertain future for the thousands of Marylanders whose jobs are connected to the shrinking federal government, and cuts from Capitol Hill and the State House on the horizon, city and county officials find themselves in a tough bind. At their level of government, it's not simply a change in political thinking that's driving government downsizing, reinvention or whatever else you want to call it. It's the derailment of the gravy train from the property assessment office.

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