Baltimore, including Mount Vernon (pictured above), had falling… (AMY DAVIS, Baltimore Sun )
Maryland homeowners will see property values plunge 22 percent on average in the latest round of state assessments — a record drop that won't necessarily translate into lower taxes.
State assessors plan to announce the details today as they mail notices to the one-third of residential and commercial owners whose properties were reassessed, about 740,000 in all. Assessed values dropped on 95 percent of the residential properties compared with their last reassessment in late 2007, when home prices were just beginning to reverse after big increases.
Assessors calculated the decline in home valuations at $50 billion statewide. Commercial property values fell about $450 million.
Counties with the biggest decreases typically "had the most rapidly rising assessments when the market was very overheated," said Robert Young, acting deputy director of the state Department of Assessments and Taxation. "In some counties, the number of short sales and foreclosures have dramatically increased."
It's the second year in a row of big declines in assessments statewide. Average residential values fell almost 20 percent in the last round of reassessments, which included a different group of homes. Assessments are done on one-third of each county and Baltimore City every year, with each property revalued once every three years.
Prince George's County saw the largest drop this time. Its average home value sank 35 percent compared with three years ago, driven downward by high levels of distressed-property sales.
Anne Arundel County's 23 percent average drop was the largest in the Baltimore region, closely followed by Howard County, down almost 23 percent. State assessors in Howard said properties previously valued at $1 million and up were among the hardest hit. In Anne Arundel, assessors found that values in moderately priced communities near the city took a bigger beating than more expensive areas as a result of foreclosures, though no neighborhoods were spared.
"Everything went down," said Joseph Glorioso, supervisor of assessments in Anne Arundel County.
Baltimore had the smallest drop in the region and one of the smallest statewide. Home values were down about 14 percent in the middle section of the city that was evaluated by state assessors, including a wide range of communities from Mount Vernon to Druid Heights.
New homeowners will enjoy the results of lower assessments when their tax bills arrive in July. But other residents could receive a bill that's the same or even higher than this year's amount, thanks to the state's complex system of tax credits for owner-occupiers.
The Homestead credit is designed to keep annual property taxes from rising too fast. Once residents have lived in their homes for a full tax year, the amount of assessed value they're taxed on can rise no more than 10 percent, though many jurisdictions have set even lower caps. In Baltimore, for instance, the ceiling is 4 percent.
As a result, many residents who bought their homes before the housing bubble sent sale prices skyrocketing have been paying taxes on just a fraction of their home's total assessed value. So even a substantial drop in that value might not be enough to close the gap.
"We had so many people in shock last year when their assessments went down and their tax bills went up," said C. John Sullivan Jr., director of the state's assessments agency.
He said his department, which values properties but does not set tax rates or Homestead caps, could not calculate how many residents will see their tax bills drop in July.
Just as the Homestead credit blunted the effect of fast-rising home assessments on taxpayers during the housing bubble, it is easing the fiscal impact of the housing bust on local government budgets. Anne Arundel County, for instance, won't see the big drop in property-tax revenue next July that its falling assessed values would suggest because its Homestead cap — at 2 percent — is one of the lowest in the state.
"There's a substantial buffer built into the assessable base with the Homestead credit," Anne Arundel County Executive John R. Leopold said.
Some counties saw modest increases in assessed values on commercial properties, which also eases the revenue sting. Overall, the state decline in reassessed commercial values amounts to about 1 percent, far less than the residential decline.
But that doesn't mean jurisdictions will feel no pain. Slower growth in property-tax collections can force difficult decisions.
In Baltimore, property taxes are the largest share of revenue by far — more than $760 million this fiscal year. The city's property-tax revenues were up about 6 percent despite a drop in the value of both commercial properties and homes reassessed last year.
Even so, the city — struggling with falling revenue in other categories — had a $121 million budget gap to close. Officials cut spending and raised other taxes to make the numbers work.