Revenue tops estimates

$19.4 million more than forecast fills county coffers through October


Revenue is flowing into Howard County government coffers faster than predicted, producing $19.4 million more than forecast through October.

Overall, the county collected $360.3 million by October's end, compared with predictions of $340.8 million by that time, according to Jonathon Seeman, the county budget director. The increase is 5.7 percent more than predicted. The revenue also represents an 11.6 percent increase over last year at the same time, and reflects better than expected results from income and property taxes, building permits and various fees, Seeman said.

"The numbers look good, but it's still early in the year," Seeman told the County Council this week.

Officials cautioned that slowing real estate sales and a looming $400 million debt for future retiree health benefits could affect the year's financial outcome.

"We're always going to be conservative in our revenue estimates," County Executive James N. Robey said, noting that "we've had them go up and down in the past." The county has received only one distribution of income tax revenue from the state, he pointed out. Seeman also said inflation in such areas as energy costs and health insurance will eat up much of the added income.

"This is all a guess. You make these guesses based on guestimates. There is still a lot of room for error in there," Robey said.

Because property tax bills go out July 1, most of that revenue - the largest single source of county funding - has been collected, and the county has $12 million more than predicted last spring, when the current budget was adopted. Howard has a 5 percent assessment cap, limiting the growth of taxes on existing homes.

But the cap does not cover property taxes on new homes, businesses and sales of existing homes, and revenue is up 4.1 percent over expectations and 7.9 percent over last year at this time, Seeman said.

Property taxes represent 45 percent of all county revenue, and income taxes are 40 percent of revenue.

Revenue from income taxes, real estate transfer and recordation taxes was calculated through November, and all categories showed hefty increases, Seeman said.

Income tax collections are up 19.1 percent over predictions and last year's revenue for the same period.

Real estate transfer taxes are up 21 percent over expectations, recordation tax revenues are up 30.8 percent, and building permits are 50 percent higher than predicted, though all three of those categories combine for just $6 million.

Seeman said the county expected to see a decline in real estate-related revenue as the housing boom slowed, but that has not happened.

None of the four County Council members at the meeting offered a view of what the increased revenue might mean at budget time next spring. But council Chairman and county executive candidate Christopher J. Merdon, an Ellicott City Republican who was out of town and did not attend the meeting, called for a tax cut when he learned about the figures a day later.

"We are overcharging citizens," he said, noting the county had a $20.4 million surplus last fiscal year.

West Columbia Democrat Ken Ulman, another candidate for county executive, said after the meeting that a tax cut is always possible, though he would not want the next executive to face a potential revenue deficit because of a short-term tax cut.

Others took a different message from the figures.

"These are very good figures," said western county Republican Charles C. Feaga, who launched into a defense of growth.

"We have a number of `no-growthers' who say `don't build because we don't have the infrastructure.' I don't think people realize how much we depend on growth" for revenue, he said.

Without growth-generated revenue, "we could not afford the good schools and everything we have," Feaga said.

Later, Feaga added: "We have not learned to live without growth. We can't afford to cut back on growth."

Councilman Guy Guzzone, a North Laurel-Savage Democrat, pointed out that "there are different kinds of growth." County policies slowing homebuilding have had an effect, he said, adding that "because we've held back on growth, values have gone up."

Pat Dornan, who led a grass-roots petition drive against Robey's 30 percent local income tax increase in 2003, said the news reinforces his belief that taxes are too high. "There absolutely should be a tax cut," he said.

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