Baltimore County to drop surcharge on property tax

Installment payments triggered small fee

February 03, 2000|By Liz Atwood | Liz Atwood,SUN STAFF

Baltimore County officials have decided to eliminate a property tax fee -- a move that will put enough money in the average homeowner's pocket for a meal at a decent restaurant.

County officials announced yesterday that they would eliminate a surcharge applied to homeowners who pay their property taxes in two yearly installments, rather than once a year. The average homeowner would save $24 a year.

"Times are good, revenues are good. There was a feeling we could absorb this loss," said County Executive C. A. Dutch Ruppersberger. Officials announced their intention to drop the fee yesterday.

The county, which recorded a $148 million budget surplus at the end of its most recent fiscal year, expects the change to cost it $2 million a year.

"It's not a great expense," said County Council Chairman Joseph Bartenfelder, a Fullerton Democrat. "It puts a positive attitude out there."

Baltimore County has allowed homeowners to make semiannual installments since 1997 by special arrangement. The General Assembly made semiannual payments the standard method last year in a move designed to reduce closing costs for homebuyers.

The law changed the way property taxes are collected by cities and counties. Unless a homeowner chooses otherwise, taxes are due in twice-yearly installments rather than once a year.

The change reduced closing costs because homebuyers pay less upfront into an escrow account to cover the coming year's taxes. The buyer of a $150,000 home pays about $630 less at closing.

The change had a negative side effect for local governments. When governments collected most of their property taxes once a year, they placed the money in interest-bearing accounts until they needed it. For Baltimore County, the interest amounted to about $2 million a year.

The legislature allowed counties to add a surcharge of up to 1.65 percent of the semiannual tax bill to recoup the lost interest. Taxpayers who choose to make one annual payment do not have to pay the fee.

Many homeowners will probably cheer the decision to drop the surcharge, but John O'Neill, a Ruxton resident and past chairman of the Maryland Taxpayers Association, said, "I thought it was kind of a fair thing."

He noted that in addition to lost interest, the county incurred the cost of processing payments twice a year rather than once.

Ruppersberger said he gained the support of all seven council members, who are expected to approve a resolution wiping out the fee in the next few weeks.

Sun staff writer David Nitkin contributed to this article.

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