A penny here

September 16, 2005

IT WOULD be tempting to dismiss as self-serving political hokum Gov. Robert L. Ehrlich Jr.'s stated intention to reduce the state property tax rate by a penny or possibly two. After all, Mr. Ehrlich raised the rate by nearly a nickel two years ago. He understandably wants to atone. But though Maryland is currently experiencing a tax-revenue surplus, that situation is likely to reverse itself in the not-too-distant future. As we've stated before, Mr. Ehrlich's touted billion-dollar surplus is little more than a mirage. And no less a fiscal expert than Comptroller William Donald Schaefer, a reliable Ehrlich ally, is adamant on the point.

But hold on a minute. The governor has added an intriguing wrinkle to the notion of a tax cut this week.

A spokesman says Mr. Ehrlich would like to target the tax deduction to benefit low-income and first-time homebuyers. And while he offered no specifics of exactly how this would be accomplished - his spokesman said he wants to meet with legislative leaders first - any effort to help make housing more affordable for Maryland residents has considerable appeal.

As a pure tax cut, a penny doesn't amount to much. It's a savings of less than $2 a month for the owner of a $200,000 home. The sad fact of the matter is that nobody would even notice such a microscopic deduction. Counties regularly raise and lower property tax rates by more than that. But take that same penny and funnel the $43 million that it collects into a statewide program geared toward helping first-time and low-income buyers - a revolving low-interest loan fund, for instance - and the governor might be on to something.

Certainly, the need is there. One unfortunate side effect of the rapid gains in the housing market is the growing gap between those who can afford to own a home and those who can't. In the more affluent suburbs, police officers, firefighters, teachers, all have difficulty buying a starter home. A recent Federal Reserve report suggests minority homebuyers are more apt to get stuck with high interest rate mortgages, compounding the problem.

So we would urge the governor to pursue this idea. A negligible tax cut won't necessarily help him politically (he may recall that Parris N. Glendening's 10-percent cut in the income tax rate didn't get his lieutenant governor, Kathleen Kennedy Townsend, elected in 2002), but helping solve Maryland's work-force housing problem would clearly benefit everyone.

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