Panel suggests maintaining state property tax rate

Treasurer warns of worsening state budget deficit if no increase in imposed

April 17, 2007|By Andrew A. Green | Andrew A. Green,Sun reporter

An advisory commission is recommending that the state's portion of the property tax remain at 11.2 cents per $100 of assessed value, despite warnings from Treasurer Nancy K. Kopp that without a tax increase, Maryland's projected budget deficit will grow worse.

The Commission on State Debt, made up of Kopp, Comptroller Peter Franchot, three members of the O'Malley administration and a member of the public, is required annually to recommend a rate for the state property tax.

The state tax is dedicated to paying the interest and principal on the bonds Maryland issues to build schools, roads, prisons and other major projects. The majority of the property tax Marylanders pay goes to county and municipal governments.

FOR THE RECORD - An article in Tuesday's Maryland section about the state property tax rate incorrectly reported the amount of General Fund money budgeted to cover Maryland's debt service payments in the fiscal year that begins July 1. The correct figure is $29 million.
THE SUN REGRETS THE ERROR

The current tax rate won't be high enough to cover the state's anticipated debt service payments, according to a report prepared for the commission. More than $29 billion of the state's general fund budget for the fiscal year that begins July 1 is dedicated to making up the difference.

During the next five years, the general fund payments will top $225 million. During that time, projected state spending is expected to outpace general fund revenue by more than $1 billion a year.

"Knowing that the general fund budget does face a serious structural deficit over the next several years, to increase it by a quarter-billion dollars doesn't seem wise," Kopp said. "I understand nobody likes to raise taxes, but we should realize a penny for the average homeowner is only $22 a year."

The Board of Public Works, a three-member panel consisting of Gov. Martin O'Malley, Franchot and Kopp, is expected to approve the commission's recommendation tomorrow.

According to estimates from the treasurer's office, raising the property tax rate to 12 cents per $100 would eliminate the need for a subsidy and produce a surplus of $34 million in five years.

andy.green@baltsun.com

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