With a new tax blocked, county seeks revenue

Legislative delegation blocked transfer fee

`I thought we had a chance'

Measure could have generated $8 million

General Assembly

Carroll County

April 08, 2004|By Mary Gail Hare | Mary Gail Hare,SUN STAFF

Carroll County never had the opportunity to get in line when state legislators were introducing bills in the General Assembly that would increase revenues for school construction and transportation in other metropolitan counties.

Faced with expected shortfalls in state revenue and increased demands on services, Carroll and neighboring counties are scrambling to find other sources of income.

In Harford County, legislators have proposed a $10,000 impact fee on new construction. Howard County has asked for a public school facilities surcharge on any new construction that sells for more than $200,000. Anne Arundel County is pushing for a cellular phone tax. In Frederick County, state Sen. David R. Brinkley, who also represents Carroll County, is lobbying for a 1 percent building excise tax. The bills are all pending.

But Carroll's entire legislative delegation, led by chairman Sen. Larry E. Haines, blocked the Carroll County commissioners' efforts to enact a real estate transfer tax that would have generated as much as $8 million in fiscal 2005. The proposal never reached the General Assembly.

The Carroll County commissioners said they are particularly disappointed that Brinkley would reject their proposal and then write a similar tax bill for Frederick County. Brinkley's bill would authorize the Frederick County commissioners to impose a building tax, based on square footage, to finance public school improvements, affordable housing and transportation.

"Brinkley acknowledged that we ought to have a transfer tax," said Commissioner Dean L. Minnich, who had hoped to fund needed improvements in police, fire and emergency services, and school construction with new tax revenue. "But, unfortunately, our entire delegation followed the lead of the senior senator in rejecting our proposal."

The county needs permission from the General Assembly to levy a tax on real estate transactions. The commissioners said the transfer tax, rather than an increase in the property tax, would affect the fewest county residents. They said the transfer tax would affect about 2,000 households, while the property tax would affect 57,000 households.

Brinkley said his opposition to Carroll's proposal was based on its lack of specifics. The proposal said revenue from the 1 percent transfer tax would be used specifically for police, fire and emergency services and schools but did not give the percentage that would be spent on each. The Carroll proposal "grossly underestimated" the potential revenue from the transfer tax, he said.

The Frederick bill "directs dollars and says where the county uses the money," said Brinkley, who lives in Frederick and is a first-term senator and former delegate. "There are significant differences in the two proposals."

Commissioner Julia Walsh Gouge said Brinkley initially seemed supportive of the county's proposal, "but he did not go out of his way for us when the issue was scuttled because of Haines."

Home construction continues at a solid pace in Carroll despite a freeze on residential development. She said the time has come to approve a transfer tax.

"I thought we had a chance," Gouge said. "If there ever was a time when we needed this bill, it is this year and next. The building is going on in the county now. We are talking about building another new high school, and it takes $4 million a year just to operate one."

Ted Zaleski, Carroll's budget director, said that other counties in the metropolitan area are facing the same budget constraints.

"The commissioners need the revenue to provide the level of services and to make improvements," Zaleski said. "We specifically said the money would go to law enforcement, fire protection, emergency services and schools."

Carroll's budget officials estimated that transfer tax revenue in fiscal 2005 would be $8 million. Brinkley and Haines said the figure would be closer to $11 million.

Because the transfer tax is tied to a fluctuating housing market, Zaleski said, the county did not want to overestimate the revenue that would be generated.

"The Frederick bill reflects what I want to see, including a property tax cap and a provision that all the dollars would go to school construction or renovation or transportation," Brinkley said. "It shows how to direct the money. It also allows the Frederick commissioners to finance the fee."

Carroll will gather revenues this year from the increases in assessments on real estate, income tax and an increase in the property recordation tax, which became effective this year. Revenue from the recordation tax will add as much as $18 million to Carroll coffers this fiscal year.

"They will get through this year," Brinkley said of Carroll County. "The challenge will be next year. They have a year to come back and fix the bill."

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