Leaders seek to trim state's property tax

Md.'s improving finances allow for a reversal of recent increase, they say

General Assembly

February 03, 2005|By David Nitkin | David Nitkin,SUN STAFF

Democratic leaders in the House of Delegates want to roll back the state portion of property tax bills to save families an average of $90 a year.

Maryland's improving financial picture means the state has enough money to reverse a tax increase first proposed by Gov. Robert L. Ehrlich Jr. two years ago as part of a budget-balancing package, lawmakers said yesterday.

"Property taxes are among the most unfair taxes anybody can pay," said Del. Kumar P. Barve, the House majority leader from Montgomery County. "We didn't like it to begin with. We always thought it would be a temporary tax."

The tax break would cost the state about $166 million per year, and Democrats propose paying for the first year by tapping excess reserve funds. Ehrlich's budget proposal contained at least $200 million more in a rainy-day account than state law says is necessary.

House lawmakers will include the proposal as part of the annual budget bill or companion legislation that addresses other fees. The Senate would have to approve the idea - but Senate President Thomas V. Mike Miller was lukewarm yesterday.

Miller said he is not sure whether a tax cut is a good idea because the state has had so much difficulty balancing the budget in recent years. "We need less politics and more problem-solving," he said.

The announcement from House Democrats came at the same time as the unveiling of a proposal to increase Ehrlich's proposed commitment to school construction next year to $250 million, from $157 million.

Together, the initiatives seemed designed to provide political cover for Democrats, who have been sparring with the governor for months.

Ehrlich and other Republicans have criticized the Democratic-controlled Assembly for adopting a 2 percent HMO tax increase as a way to subsidize the malpractice insurance premiums of doctors. Health maintenance organizations have announced plans to pass the increase on to customers.

In addition, the governor's latest pitch for slots includes a promise to devote some proceeds to school construction.

"I think they [Democrats] have been spanked so badly they can't sit down, and they are looking for anything to get a soft landing," said John Kane, state Republican Party chairman.

Senate Minority Leader J. Lowell Stoltzfus said the tax-cutting proposal was "pure politics."

"If it is a genuine conversion, I say, `Praise the Lord.' But I doubt it," Stoltzfus said.

By law, the state property tax rate - a relatively small amount compared with county and city taxes - must be set to generate enough money to repay bonds issued for construction projects.

Until 2003, the rate was kept artificially low because general tax dollars were used to subsidize the bond payments. But the subsidy ended under Ehrlich, who first proposed the property tax increase after he reduced the amount the state would have received from licensing fees under his slots plan.

The governor has also said he would like to undo the increase - the rate was raised to 13.2 cents per $100 in assessed property value, from 8.4 cents - and said yesterday that the state Board of Public Works was preparing to reduce the tax.

"We will be able to move in the right direction over the next couple of months," Ehrlich said.

Sun staff writer Andrew A. Green contributed to this article.

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