City tax bills likely to rise

Lower property rate proposed, but values of homes have soared

Increased costs also foreseen

Council members study budget plan for places they can trim expenses

Annapolis

April 28, 2003|By Amanda J. Crawford | Amanda J. Crawford,SUN STAFF

If you are an Annapolis homeowner, chances are the value of your home went up sharply in the state's recent triennial assessment -- maybe even more than the city median of almost 40 percent.

But Mayor Ellen O. Moyer has proposed cutting the city property tax rate by 2.4 cents in her spending plan for the next fiscal year.

So will property taxes be going up or down in the city?

More than likely, city homeowners will see a small increase in their property tax bills if the city council adopts Moyer's $54.9 million operating budget. While her proposal to cut the property tax rate from 62.4 cents to 60 cents per $100 of assessed value would offset the impact of rising assessments somewhat, it won't wipe it out. The city still expects to take in almost 5 percent more in property taxes than last year.

"It does not completely offset the increased assessments, but I think this is the best we can do right now," Alderman Joshua Cohen said of the mayor's proposed tax rate. "On the one hand, the costs of city services continue to rise; and on the other hand, aid that we have traditionally relied on from the state is not there."

New assessments are phased in over a three-year period, either by one-third of the increase per year or a 10 percent increase, whichever is less.

The state limits assessment increases per year for tax purposes to 10 percent; this applies only to owner-occupied homes. Local governments can set lower limits. Anne Arundel County recently lowered its limit from 4 percent to 2 percent.

Last fall, the city council rejected a proposal for a 4 percent limit, leading many to speculate that Moyer would propose a tax rate reduction.

According to state figures, the median increase in assessments citywide was 39.7 percent. In some neighborhoods residents saw larger increases. In downtown and Murray Hill, the median increase was 56.3 percent. The lowest median increase among six city areas was in the Forest Drive area, where median home values went up 25 percent.

The median home value citywide rose from $135,350 to $195,330. A homeowner whose property was valued at the median and saw the same increase -- phased in at the 10 percent limit for this year -- would see their city tax bill rise from $845 to $929 this fall if the tax rate stays the same. Under Moyer's proposed rate of 60 cents, the bill would go up about $49 to $894.

With a 60-cent tax rate, the city would take in 4.8 percent more in property taxes next year. Revenue from "real property" taxes, including commercial and residential properties, would go up 6.5 percent. For the city to collect the same amount of taxes as last year, the property tax rate would have to be adjusted to 57.1 cents -- a figure known as the "constant yield" tax rate.

However, Tim Elliott, finance director, said the city needs to take in more revenue this year to maintain city services because of increased costs. He pointed out that 80 percent of the city's 500 employees are eligible for 5 percent merit raises this year. The cost of employee benefits is slated to increase 14 percent. Spending to pay down the city's debt is expected to increase 36 percent this year. And funding from the cash-strapped state government is down about $800,000.

"We have two choices: We either ... take the extra 5 percent revenue and keep services as they are or we have to say, `OK, let's look at service cuts,'" Elliott said.

Some on the city council are looking for things to cut.

Though she doesn't have a specific rate reduction in mind, Alderwoman Louise Hammond says she is perusing the budget with an eye for things to lose.

"I would certainly like to make an effort to reduce it," Hammond said of the tax rate. "When we look at the budget we should make every effort we can -- our goal should be striving to make sure the taxpayers are getting their money's worth.

City residents also pay county property taxes of 55 cents per $100 of assessed value. Anne Arundel County Executive Janet S. Owens will propose a new county tax rate in her county budget proposal this week.

The Annapolis city council will hold a public hearing on the mayor's budget at 7 p.m. today in council chambers in City Hall on Duke of Gloucester Street.

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