Delegate wants council to abolish property tax fee

But some say county would lose $1.2 million

February 13, 2000|By Scott Calvert | Scott Calvert,SUN STAFF

Members of the Anne Arundel County Council are resisting pressure from a state lawmaker to wipe out a small property tax fee that pumps more than $1 million into county coffers every year.

The request from Del. John R. Leopold, a Pasadena Republican, comes as the General Assembly considers a bill that would forbid counties from levying the fees, charged to homeowners who opt to pay their property taxes twice a year instead of annually.

The fees -- designed to make up for investment income the county loses by not receiving full tax payment in September -- amount to $10 or $12 for many homeowners, county officials say.

Leopold wants County Executive Janet S. Owens to push the council to end the fee, suggesting that local decisions might keep state legislators like himself at bay. If the county acts, he said, the council could always reinstate the fees if finances got tight. If the General Assembly acts, that option would not exist.

"The choice is whether the county executive wants a permanent ban or a flexible ban," Leopold said Friday.

Leopold said ending the fees would encourage more homeowners to move from annual to semiannual tax payments, because paying twice a year would result in lower closing costs for homebuyers and a tax-escrow refund for existing homeowners.

Owens has not publicly weighed in on the issue, but some council members said the change would cost the county too much money -- $1.2 million, according to county finance officer John Hammond, enough to pay 30 teachers' salaries.

The county auditor's office said the loss could climb to $2.8 million if the fee was eliminated. A state law made paying property taxes twice a year the standard method.

"Something's going to suffer -- either education, public safety or some of these other programs we're running," said Council Chairman Daniel E. Klosterman Jr., a Millersville Democrat.

"It's easy for them over there [at the State House], but then we have to scrounge around to make up the additional money somehow."

"Every little million counts," said Councilwoman Pamela G. Beidle, a Linthicum Democrat.

Leopold said executives in Baltimore and Montgomery counties recently proposed to abolish the fee. Baltimore County Executive C. A. Dutch Ruppersberger said his county could afford to lose the $2 million the fee brings in; the county ended the last fiscal year with a $148 million budget surplus.

But Anne Arundel has a smaller projected budget surplus -- about $25 million, according to Hammond -- and a long list of demands.

Owens has made school repairs a priority and said they would cost $430 million. In addition, county departments have asked for $160 million in capital projects, with only $54 million to go around. Teacher salaries are sixth-lowest in the state, and police salaries also rank near the bottom statewide, Owens spokesman Andrew Carpenter said.

"There are a lot of bills coming due in Anne Arundel County," Carpenter said, adding that Owens plans to speak to the county's legislative delegation about the property tax fees.

Leopold argues that the county could make up for the lost income by streamlining its bureaucracy. By opting to pay semiannually, a homebuyer can save several hundred dollars at closing, he said, because banks and financial institutions would require the buyer to put a half-year of real estate taxes in escrow instead of a full year's worth. Homeowners who switch from annual payments would get a one-time refund, worth six to eight months of property taxes, depending on how much money they put in escrow when they bought the house.

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