Taxpayers in Anne Arundel County have the lowest local tax bills in the region, followed closely by those in Howard, Carroll and Baltimore counties, according to a rare comparison prompted by Maryland's new "Truth in Taxation" law.
The state law, which went into effect this month and simplifies property assessments by using 100 percent of value instead of 40 percent, dramatically dropped local property tax rates -- without changing the amount people owe. Howard County Executive James N. Robey asked for the survey to see how Howard's tax burden compares to those of other jurisdictions in the region.
City has highest taxes
The ranking shows Montgomery County fifth-lowest, followed by Frederick, Harford and Prince George's counties, with Baltimore City ninth -- with the highest local taxes in the region. The survey was done by Raymond S. Wacks, Howard County's budget director, based on a fictional family with Howard's mean family income of $69,200 and house value of $176,500.
"You can make your own decision about where the tax burdens lie," Wacks told members of the Howard County Council during a presentation of the information last week.
He excluded municipal taxes and fees, such as those paid by residents of Annapolis, Westminster, Bel Air, Rockville and Columbia, listing them on a separate chart, though he said some members of his staff felt strongly that they should be included among the other taxes. In Howard County, for example, Columbia residents pay an average of $644 a year to the Columbia Association in addition to county taxes, while Frederick City residents pay $1,109 more annually.
The fact that taxes in Baltimore are higher than in the suburbs is hardly news, but Robey said he is pleased that Howard has the second-lowest burden in the Baltimore-Washington area.
"I feel great about it. It shows we're giving the citizens the most value for the least money," Robey said.
Howard Republicans also were pleased.
"It confirms the fact that Howard County has been an exciting, attractive place to live. It should be no surprise why we've been a magnet," said Republican state Sen. Martin G. Madden, the Senate minority leader.
Officials from jurisdictions lower on the list made a few other points.
"When you do this, you're doing it on the revenue side only, so you're not evaluating what the different services offered are. You get only a portion of the perspective," said Fred Homan, Baltimore County's budget director.
`Not totally accurate'
Baltimore County is fourth in the ranking, with a tax burden of $3,995 a year and no municipalities. That's $268 higher than Arundel's level of $3,727, not counting Annapolis residents, who pay $499 in city taxes.
"Are you as satisfied with the services you're getting in Baltimore County as in Howard County? I think you'll find most people are," Homan said.
Doug Brown, Baltimore City's public policy analysis supervisor, said "comparisons of this nature at the very best are interesting, but not totally accurate" because Wacks used only Howard's median figures.
"There's no question that the tax burden is higher in the city," Brown said, but it's not the whole picture. He noted that the same house would have different values depending on its location. That in turn would mean different income tax deductions based on property taxes paid.
Baltimore residents pay $5,897 a year according to the comparison, more than $2,000 a year higher than what Arundel or Howard residents pay.
But Anirban Basu, director of applied economics at the Regional Economic Studies Institute at Towson University, said using Howard's mean figures for each jurisdiction is valid. "For that particular family, it is probably the case that taxes in Howard County are pretty low. If you looked at a different income level, the results would change."
Other factors cited
Other factors could change the outcome, he said, noting that many city residents don't own property.
Basu said taxes in Howard are lower than in Carroll or Harford counties because Howard "has a pretty substantial commercial base [23.1 percent]."
Carroll, by comparison, has a 13 percent commercial base, and Harford's is 17.1 percent. Baltimore County has a 26 percent commercial base. Baltimore City has the largest, at 35 percent, but Basu said many people holding those commercial jobs live outside the city, so they pay income and property taxes elsewhere.
"The tax system in a sense works against the city," he said, adding that the city makes up its losses with state and federal aid.
In Howard, officials are pondering whether their new property tax rate of $1.044 per $100 of assessed value might help in the war of perceptions. Robey is considering whether to merge the county's separate fire property tax into the general rate. But he worries that might create the perception of a huge property tax increase because the rate would go up even though residents' bills would not change.
The new assessment system quietly changed every tax rate in Maryland on Oct. 1, but most taxpayers won't learn about it until they get their annual bills in July.
Assessment increase in Annapolis eats up tax cut. (Article, 5B)