Piggyback

No politician enjoys raising taxes. But the Carroll PTC commissioners' proposal to increase the state income-tax piggyback rate to the maximum allowable 60 percent is based on sheer necessity, as the county faces a formidable school shortage.The higher piggyback tax, which would mean an extra $100 in local tax for a person paying $1,000 in state income tax, is preferred by the commissioners over an increase in the property tax rate, which has been stable at $2.35 per $100 assessed valuation since 1990.

Maryland's counties and Baltimore face a collective loss of more than $40 million a year and some taxpayers could get refunds if a decision by the state's highest court isn't reversed on appeal to the U.S. Supreme Court. The state Court of Appeals ruled in January that Maryland must offer a credit to taxpayers with some types of out-of-state income to offset the local piggyback tax. Maryland Attorney General Douglas F. Gansler asked the court to reconsider that decision, but it rejected that request last week.

Maryland's counties and Baltimore face a collective loss of more than $40 million a year and some taxpayers could get refunds if a decision by the state's highest court isn't reversed on appeal to the U.S. Supreme Court. The state Court of Appeals ruled in January that Maryland must offer a credit to taxpayers with some types of out-of-state income to offset the local piggyback tax. Maryland Attorney General Douglas F. Gansler asked the court to reconsider that decision, but it rejected that request last week.

Maryland's constitution mandates that every student have access to an adequate (indeed, "thorough" is how it's described) education. Court cases have backed this up, and the state legislature's response was the Bridge to Excellence in Education Act, more commonly known as the "Thornton" funding that ensured even the state's poorest jurisdictions had enough money for K-12 schools. Crucial to this transfer of tax dollars from the state to local school systems was the assurance that Baltimore and the 23 counties would maintain their share of that financial responsibility, too. Otherwise, the $1.3 billion in Thornton assistance would not provide a boost to schools but merely give local governments an opportunity to slack.

So now everyone is arguing about the federal responsibilitiesthat led to the Los Angeles riot and the programs Washington ought to institute. Only last month, the fashionable thing to believe was that any urban problem out there is not the nation's responsibility but California's.If that is so, the cures to whatever may ail Baltimore are to be found not in D.C. but in Annapolis.So it is interesting that the legislative session this year did not address those problems. The challenge was to raise taxes just enough to maintain services and employment, to get state government through this recession year.

The County Commissioners rejected yesterday a proposal to increase the county's piggyback tax to 60 percent, a move that could jeopardize plans for building four new schools in the next five years.The commissioners voted 2-1 to increase the piggyback tax -- from 50 percent to 58 percent in fiscal 1996 only. County budget officials had proposed raising the tax to 60 percent for the next five years to raise school construction money."The capital budget will need to be amended to eliminate four schools over the next five years," said county budget director Steven D. Powell.

Mayor Kurt L. Schmoke's proposal to raise the piggyback income tax city residents pay from 50 to 55 percent has caused a predictable hue and cry in the City Council. "We're taxing ourselves out of business here," Councilman Anthony J. Ambridge, D-2nd, harrumphed. "It's going to be a hard sell."The council members who echoed that sentiment have a point. With Baltimore City already taxing its property owners twice as much as the suburban counties, an increased piggyback tax would seem to be a ticket to disaster.

Wall Street is sounding the alarm on one of the most popular ways to buy a house in many high-cost areas around the country - so-called "piggyback" programs that mesh simultaneously closed first-lien mortgages and second-lien credit lines or mortgages. As of July 1, the most influential ratings agency in the mortgage arena, Standard & Poor's Corp., has upped the ante for lenders who seek to fund piggyback deals through capital market financings. The move is likely to raise interest rates and fees for some homebuyers this summer, mortgage experts say, and could reduce the volume and availability of piggyback programs overall.

Kurt L. Schmoke's failure to get enough City Council support behind his proposed piggyback tax increase underscores once again what a quizzical politician Baltimore's two-term mayor is.As with major initiatives in the past, the mayor was content to propose something and then sit back, without explaining or lobbying. This kind of power vacuum then allowed the council and its president, Mary Pat Clarke, to do all the dancing around the discards of what started as the mayor's priority bill.If these things were logical, one might think that Mr. Schmoke let all this happen because he really did not want to hire 233 more police officers and 100 more firefighters.

The County Commissioners reversed themselves yesterday, voting 2-1 to increase the piggyback income tax from 50 percent to 58 percent for the next six years.The action restores $41 million to the county's six-year capital budget to build four new schools by the year 2001.The construction plan was jeopardized Tuesday when the commissioners voted to raise the piggyback tax to 58 percent for fiscal 1996 only.After changing their minds on the piggyback tax, the commissioners voted unanimously to adopt a $155 million 1996 budget that includes more money for schools without raising the county's $2.35 property tax rate.

Counties, cities seek U.S. funds for broadband network Eight Central Maryland counties and two cities have jointly submitted an application for $100 million in federal stimulus money to create a regional broadband computer network. Ira Levy, Howard County's information technology director, has been leading an effort to jointly apply for the federal funds, which would be used to link Baltimore and Annapolis to governments in Anne Arundel, Baltimore, Carroll, Harford, Howard, Frederick, Prince George's and Montgomery counties.

Let Mr. Flip piggyback on the suggestion made by his colleague Rick Maese in yesterday's editions about restoring some luster to the Triple Crown by adding a week between the Kentucky Derby and Preakness. His argument is that we would see more Derby horses in Baltimore if they had another week of rest. Good idea. And how about another one? You want to run your horse in the Derby? Fine, but you have to pledge a large fee - Mr. Flip doesn't move in horse ownership circles, so he wouldn't know exactly how much - that you'll also run your horse in the Preakness and the Belmont Stakes.

Is any show-biz industry prone to the rip-off more than home-video movie tie-ins -- the grab-bag releases that fly straight to video in order to piggyback on a theatrical film's success? Even in the VHS era, fly-by-night distributors would flood bargain bins with cheap animated retellings of fairy tales, myths and legends whenever Disney released a blockbuster like The Little Mermaid or Pocahontas or re-released a classic like Snow White and the Seven Dwarfs. These days, the come-on and execution are often classier, the content just as flimsy.

So-called "piggyback" credit-score inflation schemes for mortgage applicants haven't been reined in, despite industry pledges to do so at the end of summer. As a result, lenders continue to be misled into treating loan applicants with poor credit as prime-credit candidates - worsening already critical fraud and delinquency problems in the mortgage market. Fair Isaac Corp., developer of the FICO score widely used for home loan underwriting, confirmed that its "FICO '08" scoring model is not yet available at any of the three national credit bureaus.

NEW YORK -- Not only are children moving back home after college and asking their parents for monthly subsidies, but in a growing number of states children can now stay on their parents' health insurance plans well into their 20s. Call it another example of adultescence. With 18- to 34-year-olds the fastest-growing group of uninsured, states are extending the time that children can be dependents for insurance purposes. In New Jersey, which enacted the highest age limit this year, children can "piggyback" until they turn 30, as long as they live in the state and don't have their own children.

Wall Street is sounding the alarm on one of the most popular ways to buy a house in many high-cost areas around the country - so-called "piggyback" programs that mesh simultaneously closed first-lien mortgages and second-lien credit lines or mortgages. As of July 1, the most influential ratings agency in the mortgage arena, Standard & Poor's Corp., has upped the ante for lenders who seek to fund piggyback deals through capital market financings. The move is likely to raise interest rates and fees for some homebuyers this summer, mortgage experts say, and could reduce the volume and availability of piggyback programs overall.

The last time Maryland set out to make its tax system fairer, it created the "piggyback" tax -- the local income tax of up to 2.5 percent.This time around, tax reformers point to the piggyback tax as one of their biggest problems.While the tax was part of a 1967 plan intended to help equalize revenues among jurisdictions, critics say it now is the single greatest source of disparity in what local governments have to spend. It benefits high-income counties such as Montgomery, but it leaves Baltimore, with far more poor people and far fewer middle-income and upper-income residents, lagging behind.

If the General Assembly cuts state income taxes next year, will Baltimore County Executive C. A. Dutch Ruppersberger III want authority to raise the ceiling on the local piggyback tax to replace lost revenue?That's what Sen. John A. Cade, an Anne Arundel County Republican, wanted to know when Mr. Ruppersberger appeared this week at a legislative hearing in Annapolis.The county executive's answer didn't included the dreaded "T" word. Instead of a direct answer, he said, "We certainly need the tools at the local level," if state officials don't replace revenues lost in a tax cut.And although Mr. Ruppersberger later would not be any more specific, he left little doubt about his intent.

Newlyweds Michelle and Samuel Riccobono knew that without a 20 percent down payment for a house, they would face the added expense of private mortgage insurance. They weren't sure they could afford that. A mortgage broker showed the Philadelphia couple how they could avoid the cost of private mortgage insurance and cut their monthly payments: a piggyback loan. Instead of going with a 100 percent mortgage as they had planned, the Riccobonos opted for an 80 percent first mortgage with a second mortgage for the remaining 20 percent "piggybacked" on. That decision saved them about $250 a month because of the lower interest rate they got on the primary mortgage, Michelle Riccobono said.

HOMEBUYERS WITH high credit scores but minimal down payment cash are about to get a new, potentially helpful mortgage option. It comes with a catchy name - the "SingleFile" low down-payment mortgage. But it also comes with some wrinkles you need to know about upfront. SingleFile loan down payments can go all the way to zero. Maximum mortgage amounts can extend well into the jumbo category: $650,000. However, you need to have a FICO credit score of 700 or higher - a tough hurdle for some buyers short on cash.