Annapolis OKs tax rise limit resolution

State is being asked to aid business property owners

January 16, 2003|By Dan Harsha | Dan Harsha,SUN STAFF

More than a month after it rejected a measure that would have further limited tax increases for some homeowners, the Annapolis city council is asking the state to allow similar limits for commercial and rental properties.

The resolution, co-sponsored by Aldermen Josh Cohen and Cynthia Carter, passed, 6-3, Monday night.

Some council members said it was little more than a face-saving measure after the council voted down a popular ordinance that would have saved homeowners money in the face of rapidly increasing property assessments.

Citywide, assessments on owner-occupied property increased an average of nearly 40 percent over the past three years.

A proposal introduced by Aldermen Sheila M. Tolliver and Louise Hammond would have limited to 4 percent a year residential property tax increases based on assessments, instead of the current 10 percent. It failed by a 6-3 vote in November.

Cohen - who with Carter, Mayor Ellen O. Moyer and others voted against that ordinance in November - said he felt an extension to commercial and rental properties would be more fair.

"We'll ask the state to limit assessments equitably to all types of properties," said Cohen. "Reducing the assessments on one property type without reducing others creates a special benefit on one property type."

Under state law, only owner-occupied dwellings are eligible for a Homestead Tax Credit. That credit keeps taxes on owner-occupied dwellings from increasing by more than 10 percent a year based on higher assessments, or a lower limit that can be set by municipalities.

Anne Arundel County recently lowered its limit on the annual increase to 2 percent from 4 percent.

Tolliver said expanding the credit to other property types does not make sense because residential and commercial property taxes are "two different kinds of entities. It's a different basis altogether."

Commercial property tax rates are calculated in part by considering the location's profitability, she said. Residential property taxes are based only on the assessed value of the home and surrounding land, according to the State Department of Assessments and Taxation.

"A homeowner's property doesn't generate income," said Del. Herbert H. McMillan, a former city council member who teamed with Tolliver to lower taxes during the last council. "A homeowner isn't going to get a 10 percent raise."

McMillan was unenthusiastic about the chances that the General Assembly will expand the credit to commercial properties.

"I think that the ball for reducing taxes in Annapolis is in the city council's court," said McMillan.

The city can adjust the property tax rate when it sets its budget in the spring. The city's property tax rate is 62.4 cents per $100 of assessed value.

Cohen also expressed concern that the Tolliver-Hammond proposal was not targeted to those who most need it.

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