Ehrlich to propose property tax cut at conference today

critics say it's too costly

September 13, 2005|By Andrew A. Green | Andrew A. Green,SUN STAFF

With part of a $1.2 billion budget surplus to spend and a blemish on his record of opposing tax increases to erase, Gov. Robert L. Ehrlich Jr. plans to announce a property tax cut at a Realtors conference in Ocean City today.

A notice of the announcement, released late yesterday afternoon, contained no details of what the governor will propose, and an administration spokesman declined to provide any.

But since Ehrlich was foiled by the Board of Public Works in April in an attempt to reduce the state property tax rate by a penny, Maryland has received increasingly good news about its budget. The state closed fiscal 2005 with a $1.2 billion surplus, although about half of that money has already been allocated.

"I think now is the time," said Sen. J. Lowell Stoltzfus, the Senate minority leader from the Eastern Shore. "Any time we can give the taxpayers relief, we should, especially in this climate of increased gas prices and increased costs."

Ehrlich has pushed for an increase in a number of fees since taking office, but the only general tax increase he has endorsed came in his first year in office when he proposed raising the state portion of the property tax from 8.4 cents per $100 of assessed value to 13.2 cents as a budget-balancing move. That's an increase of about $120 a year for the average single-family home.

During the last Assembly session, leaders in the House of Delegates proposed rolling back Ehrlich's tax increase, but the plan died in the Senate amid concern that deficits might return in the next few years.

Comptroller William Donald Schaefer and Treasurer Nancy K. Kopp, both Democrats, made the same argument in rejecting Ehrlich's proposed 1-cent cut in April.

Schaefer spokesman Michael Golden said the comptroller was informed that the governor will propose another cut today. But despite the good budget news, he still opposes it.

"He said we simply cannot afford it right now, and we need to wait at least another year to see what happens," Golden said.

Warren G. Deschenaux, the General Assembly's chief budget analyst, said the state will still face deficits over the next several years unless it experiences a long streak of unusually strong economic growth.

The state gets roughly an extra $200 million a year because of the 2003 property tax increase, so if the governor intends to propose a permanent cut he'll need to find a way to pay for it.

"If he's thinking of doing something on an ongoing basis, you'd need to be careful, but if he's doing one-time relief, that would be easier," Deschenaux said.

To reduce the state portion of property tax bills - which is much less than the taxes homeowners pay to counties and Baltimore City - the governor would have to use general tax revenue to help repay bonds. State law requires that property taxes be set at the rate needed to repay the bonds.

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