A fair exchange

The Brac Effect

September 23, 2007

It's not unprecedented for the state of Maryland to tax a private, for-profit company that's doing business on public land. In fact, the law allows it - which makes Anne Arundel County's ire at the loss of tax revenue from a planned private development at Fort Meade understandable. The relocation of thousands of federal jobs to Fort Meade will increase traffic on roads leading to the base, but officials seeking compensation must focus their efforts on the private developer, not the government.

That's because a 1953 state law precludes taxing federal enclaves. But private developers shouldn't get a free ride simply because they are behind the gates of an Army base. There are also other ways they can help lessen the impact of the base's growth.

At issue is the planned construction of a $700 million office complex for defense-related contractors expected here as part of the federal Base Realignment and Closure plan. The Army Corps of Engineers has been negotiating to build the project under an arrangement in which the developer leases the land.

Anne Arundel County has legitimate concerns. A complex of the size envisioned at Fort Meade, if built outside the gates, would generate about $6 million in county property taxes and about $750,000 in state taxes, according to county finance officials. When Frederick County sought a payment in lieu of taxes from the developer of an on-base housing complex at Fort Detrick several years ago, the state prohibition on taxing federal enclaves ended the county's effort.

But Anne Arundel isn't prepared to let it go. Nor should it when there are similar arrangements elsewhere in the country. A developer of a housing complex at Elmendorf Air Force Base in Alaska pays the city of Anchorage $650,000 annually instead of taxes. Closer to home, Montgomery County gets a similar payment from a housing developer at Walter Reed Army Medical Center.

The use of private developers to build projects on military bases has benefited the Pentagon financially. And Maryland, which is investing in improved roads and transit because of BRAC, also stands to benefit from the jobs and residents relocating here.

But taxpayers shouldn't be expected to pick up the entire tab for improvements when for-profit developers are getting the benefit of tax-free land.

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