State officials criticize Rehrmann's proposed reduction in property tax Goldstein and Dixon say cut would threaten triple-A bond rating

December 10, 1997|By Michael Dresser | Michael Dresser,SUN STAFF

Two of Maryland's top fiscal officials have weighed in strongly against a proposal by gubernatorial candidate Eileen M. Rehrmann to reduce the state real estate property tax rate to zero.

In a pair of letters made public yesterday, Comptroller Louis L. Goldstein and Treasurer Richard N. Dixon both asserted that the Harford County executive's proposal would threaten the state's cherished triple-A bond rating.

Gov. Parris N. Glendening, whom Rehrmann is challenging for the Democratic nomination in 1998, has not publicly taken a position on the proposal. However, the governor gave an indication of his thinking by distributing copies of the Goldstein and Dixon letters during a lunch yesterday with leaders of the General Assembly.

Judi Scioli, the governor's press secretary, said Glendening has kept an open mind on the Rehrmann proposal while seeking the advice of his two fellow members on the Board of Public Works.

"He's trying not to get it scrambled up in politics," Scioli said.

Rehrmann has made the tax cut the centerpiece of her long-shot campaign to unseat the governor. She argues that with the state running a large budget surplus, a significant amount of that money should be returned to the taxpayers.

But Goldstein, in a letter to Glendening, said the real estate property tax has been used since 1841 as a dedicated source of money to pay off the state's general obligation bonds. The tax stands at 21 cents per $100 of assessed value, where the Board of Public Works has fixed it since 1981.

"Reducing the rate to zero may be desirable, but begs the question of how to replace the $235 million currently generated by the state property tax each year," Goldstein said.

Dixon wrote to Rehrmann that he reads the Maryland Constitution as prohibiting the repeal of the tax unless the state were to wipe out its entire $4.6 billion of outstanding debt.

"Unless you have a foolproof mechanism planned to repay all those bonds, I question whether your plan could withstand a legal challenge," said Dixon.

But Rehrmann, who was visiting Annapolis yesterday, said her plan would pass constitutional muster because it is not an outright abolition but a change in the rate to zero. She said the state used the same method in 1984 when the administration of Gov. Harry R. Hughes effectively eliminated the personal property tax.

"We did it before. We kept our triple-A bond. We can do it again," she said.

The Rehrmann plan has met with mixed reactions among legislative leaders.

Senate President Thomas V. Mike Miller, a Glendening supporter, labeled it "reckless."

But House Speaker Casper R. Taylor Jr. said that "there's a little bit of rhetoric" in the comptroller's and treasurer's letters. He declined to support Rehrmann's suggestion of a zero rate but added that "there's nothing magic about 21 cents."

Pub Date: 12/10/97

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