Glendening's proposal to end tax break for utilities concerns Arundel officials

County could lose $ 8 million next year

January 20, 2002|By Lynn Anderson | Lynn Anderson,SUN STAFF

Anne Arundel County officials say a budget move by Gov. Parris N. Glendening to end a property tax break program for utility companies spells trouble for the county because of its property tax ceiling.

The proposal, which would end the grant program for counties with electric utility companies, could result in a loss of at least $8 million to the county next year, even though two major North County power plants would be back on the tax rolls.

The unusual circumstances that would create the shortfall could also result in lower property taxes that would save the average taxpayer $50 a year.

Glendening's decision to revise a 1999 deregulation law, including the grant program, could return to the tax books two large power plants in Anne Arundel owned by Constellation Energy Group, the parent company of Baltimore Gas and Electric Co.

Under the 1999 deregulation law, Constellation and other electric power companies in the state received a 25 percent reduction in property taxes, starting in 2000, and counties were compensated through grants. Last year, the credit was worth a 50 percent rate reduction.

But with those Anne Arundel properties paying more taxes, the county's revenue-based tax ceiling, approved by voters in 1992, would kick in, forcing the county to lower the tax rate from 96 cents to 93 cents per $100 of assessed value.

"It's a big deal," said John R. Hammond, county budget director, who added that the $8 million is needed to help balance the 2003 budget, which will go into effect July 1. The state grants, he said, were not counted as property tax revenue or figured into the tax limit and therefore cannot be recouped.

"When we lose grant revenue, we don't have the ability like other counties to make it up by raising taxes," Hammond said.

Anne Arundel County Executive Janet S. Owens, who has been briefed on the potential budget problem, is expected to address the issue at hearings before Senate and House budget committees in the spring.

County officials were surprised when they reviewed the governor's budget proposal. "When you start playing around with the assessable base and the tax rate, it has a different impact on Anne Arundel County than all the other counties," Hammond said.

The county's tax limit dictates that year-to-year increases in property tax revenue may not exceed the annual rate of inflation or 4.5 percent, whichever is less.

This early in the legislative session, it's unclear what Glendening intends to do with the grant program. His budget doesn't go into details.

A spokeswoman for the governor said late last week that he wants to "shift responsibility" for the grants to utility companies. The tax credit program would not be suspended, the spokeswoman said.

"It's a very tight year, and it's a very tough budget," said Glendening spokeswoman Michelle Byrnie. "But one of the governor's main objectives was to ... maintain direct aid.

Hammond has sought counsel from Sen. Robert R. Neall, an Anne Arundel Democrat who is a member of the Senate Budget and Taxation Committee, several times since the governor announced his 2003 budget plan Tuesday.

Neall said he is eager to hear the governor, or his staff, explain the budget item.

Revision of the 1999 deregulation would require special legislation called a budget reconciliation act.

"We have to have somebody from the administration explain this and give us more than just the spin," Neall said. "The money that funds the grants is gone, and the budget is silent on any explanation at all."

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