State tax break OK'd

Md. property rate cut by 2 cents

average savings is $40 a year

April 20, 2006|By JENNIFER SKALKA | JENNIFER SKALKA,SUN REPORTER

At the urging of Gov. Robert L. Ehrlich Jr., the state Board of Public Works approved a property tax cut yesterday that will save Maryland homeowners an average of $40 annually -- undoing part of the tax increase passed in his first year in office.

The new rate will be 11.2 cents per $100 of assessed property value, a 2-cent reduction. It goes into effect July 1.

Ehrlich raised property taxes by approximately 5 cents per $100 of assessed property in his first year.

In advocating for the rate reduction yesterday, Ehrlich said he wants to give taxpayers some relief. He also noted that Maryland's home prices continue to rise, and he wants people to be able to afford to live here.

"This state is most likely staying very hot," said the Republican governor, who is up for re-election this fall.

Two votes are required for passage on the three-member Board of Public Works. With Treasurer Nancy K. Kopp, a Democrat, firmly opposed to a property tax cut, the governor needed support from Comptroller William Donald Schaefer.

Schaefer, who voted against the cut Tuesday during a meeting of the Commission on State Debt, an advisory committee, paused for some time before voting yesterday. Schaefer, who is also up for re-election this fall and faces a Democratic primary challenge, said that taxpayers are "being strangled to death" by higher gasoline prices and a looming 72 percent increase in their utility bills. He said he felt obligated to lessen their financial burden in some way.

The mercurial comptroller, who has long been a political ally of the governor, said he had a change of heart since Tuesday's committee vote and that he would back the cut. He quipped: "Let the word be heard, let the word go out from here."

Kopp said she believes a tax cut at this time is "not prudent."

"It is not in the best interest of the state," Kopp said, noting that General Fund money will have to be used to pay for the cut.

There hasn't been a state property tax cut in more than two decades, Warren G. Deschenaux, director of the Department of Legislative Services, said yesterday. He said that when Ehrlich took office, the rate was 8.4 cents per $100 of assessed property value. A 4.8 cent increase pushed the rate to 13.2 cents per $100 of assessed property value.

Under the reduction approved yesterday by the board, the owner of a $200,000 home would save about $40 a year.

Deschenaux said that between 2007 and 2010, the 2-cent cut will cost the state $309 million in the general fund, money that could be used for other programs, including school construction.

The budget approved by the General Assembly for fiscal 2007 would take a $13.5 million hit, Deschenaux said. In other words, money already promised to certain projects will no longer be available.

"Are we still going to build those projects, and -- if not -- which of those are at risk?" Deschenaux said.

Cecilia Januszkiewicz, Ehrlich's budget secretary, disagreed with Deschenaux's numbers. She said yesterday that the administration believes it is unlikely that any additional money would be needed to support the governor's proposal.

Januszkiewicz said that any long-term general fund commitment that would be required should be blamed on the General Assembly, which, she said, shifted projects from the capital to the operating budget and caused the potential problem.

"We planned for this," Januszkiewicz said. "The governor's budget took this into account. The General Assembly created the problem by authorizing more projects."

The two Democrats vying to face Ehrlich in the general election -- Montgomery County Executive Douglas M. Duncan and Baltimore Mayor Martin O'Malley -- called the governor's move to cut property tax rates an election-year stunt. But they also have previously pushed for cuts in their respective jurisdictions.

Baltimore is in the second year of a five-year plan to cut property tax rates by 2 cents annually. Meanwhile, Duncan advocated last December for a 15 percent cut in his county's property tax rates.

An exchange between Ehrlich and Kopp put yesterday's vote in the clearest light. During the meeting, Ehrlich called the treasurer, who is appointed by the General Assembly, "a fine lady" with whom he sometimes has philosophical differences.

Kopp was quick with her own reply about why their positions differed: "And I don't have to run for office."

jennifer.skalka@baltsun.com

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