Transfer tax rise urged by council

But proposal for funds to build schools unlikely to be backed by Harford State House delegation

January 14, 2007|By Mary Gail Hare | Mary Gail Hare,Sun Reporter

A proposed increase in Harford's real estate transfer tax could provide an additional $10 million for school construction, but the County Council resolution appears unlikely to win the support of fiscally conservative members of the county's State House delegation.

The council unanimously supports an increase - from 1 percent to 1.5 percent - in the tax, levied during the settlement of properties. If passed, two-thirds of the revenue would fund long-overdue school projects with the remainder dedicated to land preservation.

Councilman Dion F. Guthrie, author of the resolution, called the transfer tax fairer than the county's costly impact fees on new construction because it is levied on all home sales. If the increase passes, Guthrie said he would push to abolish the impact fee, which adds nearly $8,000 to the cost of a new single-family home.

"The transfer tax is the most fair means of creating a revenue stream for schools," said Councilwoman Veronica L. "Roni" Chenowith. "It goes across the board to everyone."

Councilman James V. McMahan criticized the impact fee, saying, "These costs should be spread out among all the people."

Only the state legislature can enact the tax, and Harford's 11-member delegation seems reluctant to further burden taxpayers.

"It's not on my radar screen, and I certainly am not convinced it's needed," said Del. Barry Glassman, leader of Harford's 11-member delegation. "I am leery in the light of increased assessments, particularly in the county's northern end, and skeptical of the need for this increase. It is hard to go to taxpayers for more when our buckets are overflowing."

Republican Sen. Nancy Jacobs said working families face enough difficulties buying a home without adding to the costs. "I am not enthusiastic about higher fees for homebuyers," she said. "Without the delegation's support, this is not likely to go anywhere."

Del. Mary-Dulany James, one of two Democrats in the county delegation, said she has heard many complaints from her constituents about skyrocketing assessments. That revenue will probably make other tax increases unnecessary, she said.

"I will wait to see the county's budget, before making any decision on this issue," James said.

Three years ago, the delegation considered several options to fund school construction, Glassman said. Only the impact fee on new construction survived.

Impact fees generated $3.4 million in fiscal 2006, which ended in June. Because of increases in those fees, which range from $5,148 for a townhouse to $7,442 for a single-family dwelling, that amount might remain constant into this year, despite a downturn in the construction market, said John R. Scotten, county treasurer.

But the same might not be true for the 1 percent transfer tax, which yielded $11.3 million for schools last year, Scotten cautioned. "This is a slow real estate year for all jurisdictions," he said. "Collections are definitely off."

The need for school construction and renovation projects has reached critical levels, said County Executive David R. Craig, who has promised seven new schools by 2010. With the county facing unprecedented growth from expansion at Aberdeen Proving Ground, he said, school and roads projects cannot be neglected.

"We can always use the added revenue," he said. "There is a critical need for new schools within the next four years. But the impact fee is a haphazard way to raise funds."

Craig was a legislator in the early 1990s, when the General Assembly approved the original transfer tax, provided it passed a referendum. He would like the measure put to a vote again.

"We took the onus off elected officials and put the tax on the ballot," Craig said. "The people imposed it on themselves. They said how money would be raised and how it would be spent."

mary.gail.hare@baltsun.com

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