County may end property tax on some equipment Bill viewed as way to aid high-tech companies

November 17, 1996|By Scott Wilson | Scott Wilson,SUN STAFF

The County Council will consider legislation tomorrow night that could make Anne Arundel the third Maryland county to eliminate property taxes on equipment used for research and development, a move the Gary administration believes will bolster a local tax base damaged by the end of the Cold War.

The legislation, which relies on a supply-side strategy of cutting taxes to raise revenue, is the county's most recent tactic to retain coveted high-tech businesses and attract companies from outside the county.

It would save Anne Arundel research companies an estimated $2.2 million over the next five years, primarily by exempting computer equipment and software from property tax.

But the bill could result in higher taxes for other Anne Arundel residents.

"We wish to note that if the county continues to collect the maximum property taxes possible under the tax cap, any reduction in taxes resulting from this exemption will have to be offset by an increase in taxes on other taxpayers," County Auditor Teresa Sutherland wrote in her analysis of the bill.

The strategy could cost Anne Arundel almost $500,000 in lost tax revenue annually over the next five years, according to administration estimates, an amount equal to roughly a half-cent on the property tax rate.

But county economic development officials say the plan will more than pay for itself by improving the business climate, although they have presented no financial projections.

The council will meet at 7 p.m. tomorrow at the Arundel Center.

County finance officials have worried publicly that property tax revenues, which account for most of Anne Arundel's income, rose just 2.4 percent last year, the smallest increase since 1986.

County Executive John G. Gary has said that sluggishness is one reason county employees have not received raises for three years. Union leaders have called the tax break proposal "ludicrous."

The bill is largely designed to help Northrop Grumman Corp., which received an $11.5 million economic incentive package from the state in September.

The company's Linthicum plant, which it took over in January after purchasing a division of Westinghouse, is expected to add 1,500 jobs.

Three counties, including Montgomery and Howard, have lowered property taxes for businesses. Anne Arundel would join Prince George's and Worcester as the only other counties to eliminate property taxes on research and development equipment. Frederick, Kent, Queen Anne's and Talbot counties have never levied the tax.

The county's move would be consistent with economic development strategy at the state level. Last year, the General Assembly passed legislation granting companies a tax break on half of the assessed value of research and development equipment. Gary's legislation extends that tax break to the remaining 50 percent of the property's value.

County businesses spend an estimated $10 million a year on equipment used in designing and building new technology.

With the state tax break, a company saves $714 in property taxes the first year on $100,000 worth of computer equipment.

By extending the exemption, Anne Arundel would save that company an additional $1,190 in taxes the first year.

Utility companies would not receive the tax relief under the bill.

Meanwhile, the council will face another tricky issue Tuesday when it holds a second public hearing on a bill that would complicate a Prince George's County Baptist church's plans to build a 110,000-square-foot complex on rural land in Davidsonville.

Last month, a public hearing on the legislation attracted 800 people to a Davidsonville high school auditorium. Tuesday's hearing is on an amended version of the bill, which would force buildings requiring parking lots larger than 100,000 square feet to seek special permission to build on rural land.

The church would require such permission for its lot.

Leaders of Riverdale Baptist Church do not believe they will receive that permission because of strong opposition from Davidsonville homeowners.

Current law would allow Riverdale to proceed with plans to build a 1,500-seat sanctuary, a learning center, and basketball and racquetball courts on 41 acres at Route 50 and Davidsonville Road.

The hearing is scheduled at 7 p.m. at the Arundel Center.

Pub Date: 11/17/96

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