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The Washington Post Property Tax
Relief Proposed in Montgomery By Cameron W.
Barr Montgomery County Council member Phil Andrews (D-Gaithersburg) says he wants to spare homeowners some of the pain of rising real estate values by cutting the property tax rate by about 2 percent. That's the good news for homeowners. The bad news is that he wants to raise the energy tax rate to make up what the county would lose in revenue -- just one year after the county tripled the levy on energy consumption. Lurking in the background is a referendum on the November ballot that would offer homeowners longer-lasting tax relief. The measure, proposed by Republican anti-tax activist Robin Ficker, would eliminate the council's ability to override a 1990 county charter amendment's limit on increases in property tax revenue. The limit takes into account the rate of inflation, new construction and some other factors. For more than a decade, the Montgomery council complied with the charter limit. But in the past two years, it has voted to override the limit in order to take in property tax revenue bloated by assessments that increased an average of 50 percent a year in 2002 and 2003. A county regulation softens the blow to taxpayers by limiting an individual's increase to 10 percent a year, but that measure defers the rest of the increase to subsequent years. "There's really no end in sight to annual 10 percent increases [in property tax assessments] unless we do something about them," Andrews said. He said an increase in the energy tax is better because it hits federal facilities and other entities that don't pay property taxes and because people have a measure of control over how much energy they consume. Montgomery residents pay about 30 percent of the county's energy taxes and about 61 percent of the property taxes, Andrews said. Montgomery's property tax rate is $1.073 per $100 of assessed value. Andrews proposes to cut the rate by 2 cents. If the council accepts the cut, the tax bill of a homeowner with a house assessed at $300,000 would shrink by about $60. At the same time, the homeowner would face an energy tax increase of about $19 in the first year. The county tripled energy taxes last year, part of a scramble to raise revenue in the face of declining state aid. But that increase will expire in two years. Andrews foresees that his increase will stay on the books. Andrews's proposal is in keeping with tax relief offered by other jurisdictions. This month, Fairfax County supervisors cut the real estate tax rate from $1.16 to $1.13. A year ago, the Alexandria City Council cut the real estate tax rate from $1.08 to $1.035. In Montgomery County Executive Douglas M. Duncan's budget for fiscal 2005, which the council is reviewing now, Duncan (D) assumes that the property tax rate will stay the same and that property tax revenue will increase handily in the years to come. Heeding the charter limit at a time when revenue from the state is declining isn't possible, he said. "Without severely harming our schools, I don't see how it's possible to cut property tax revenues by that amount," Duncan said. If the council was to heed the charter limit, it would cut property tax revenue by $48 million in the fiscal year that begins this summer. Andrews's measure would cut less than half that amount, or about $21 million. Going all the way isn't possible for now, Andrews said. For the county, Andrews's measure is designed to be revenue-neutral. For homeowners, it offers some savings. A homeowner with a property assessed at $300,000 has a tax bill this year of $3,219, according to figures provided by Andrews. At current tax rates, rising assessments would push the homeowner's tax bill to an estimated $5,184 in five years. If the council heeded the charter limit, the estimated bill in five years would be $3,476. Under Andrews's proposal, the estimated bill would be $4,722 Andrews argued that raising assessments without cutting the tax rate is unreasonable. "People aren't going to put up with it, and they shouldn't," he said. Andrews denied that his motive was to derail Ficker's referendum. "That's not the impetus for this," he said. "But it is important for the council to show that it shares the concerns of our residents with skyrocketing property tax bills." For his part, Ficker seemed unimpressed with Andrews's approach. "What Mr. Andrews should do is to have the council stick to their own limit," Ficker said. Metro researcher Bobbye Pratt contributed to this report. © 2004 The Washington Post Company |
