Voters urged to push counties to waive fee for property tax rebate

Local governments charge to return taxpayers' money

January 11, 2000|By Michael Dresser | Michael Dresser,SUN STAFF

A Montgomery County legislator who led the fight to give Maryland homeowners a rebate on their prepaid property taxes is urging voters to demand that local governments waive the fee they charge for the refunds.

Del. Peter Franchot said the fees -- up to $13.20 on the average state property tax bill of $1,600 -- are small compared to the benefits of a law the General Assembly passed last year to cut real estate closing costs. He said the average rebate to Maryland homeowners will be $700 when the law takes full effect July 1.

Nevertheless, the Montgomery County Democrat predicted the public will view the fees as "a tax to pay their property tax."

The state's 23 counties and Baltimore City now charge the fees, but as of July 1 they will have the discretion to waive them. Franchot urged taxpayers to get in touch with their county executives, commissioners or council members to ask them to eliminate the fees.

"We want them to be complaining in the right time at the right place," he said.

Franchot estimated that the bill will return about $700 million to more than 900,000 taxpayers while reducing the state's real estate closing costs. It does so by changing the amount of property tax that must be prepaid at settlement from a year's worth to six months'. Most current homeowners are entitled to refunds from their mortgage escrow accounts.

Refunds started going out last year to homeowners who asked their lenders to make their payments semiannually. Starting July 1, all taxpayers will automatically go to a six-month payment schedule. Refund checks should arrive by the end of the year.

Del. John A. Hurson, the House majority leader, said the fees were allowed to defray local jurisdictions' cost of returning the money to taxpayers. But he and Franchot contend that after July 1, when everybody is on the same system, any additional cost to local governments will be insignificant. The fees are capped at 1.65 percent of the amount of the second semiannual tax installment.

Based on the statewide average tax bill, that would mean a $21.12 fee for a Baltimore resident if the City Council doesn't remove the fee. In Baltimore County, the comparable fee is $12.80; $12.72 in Howard, $14.72 in Anne Arundel, $16.32 in Harford and $25.30 in Carroll, according to the Maryland Association of Realtors.

David Bliden, executive director of the Maryland Association of Counties, said the fees were intended to compensate local governments for increased collection expenses and lower interest earnings. Bliden said that if Franchot is going to urge counties to forgo the fees, he also should suggest "how the lost revenue would be recouped."

Franchot said the General Assembly could eliminate the fees by passing a law. But he said he would not introduce such a bill because a deal was struck with local governments giving them the discretion to impose them.

He said local governments and banks stymied the legislation for 14 years before it finally passed.

"I'm pretty optimistic that the counties, if they hear from their constituents, will waive the fee," Franchot said.

The Political Game

Thomas W. Waldron is on assignment. The Political Game column will not appear today.

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