Ehrlich Succeeds in Cutting Property Taxes

Comptroller Joins Governor in Outvoting Treasurer, Who Warns of Negative Effects on Revenue

Maryland officials approved a modest cut in state property taxes yesterday, amounting to about $60 in annual savings to the owner of a $300,000 home.

The cut has been pushed for months by Republican Gov. Robert L. Ehrlich Jr. In an unexpected turnabout, Comptroller William Donald Schaefer (D) gave him the support he needed yesterday to see it pass.

"It would be wrong, absolutely wrong, not to let the taxpayers have this money," Schaefer said in joining Ehrlich in a vote by the Board of Public Works, a three-member panel that establishes the state's share of the property tax bill.

Ehrlich and Schaefer said they were moved in part by new financial pressures weighing down on Maryland taxpayers, such as utility bill increases, growing gas prices and fast-rising home values that are pushing property taxes up quicker than local officials can cut them.

The dissenting vote came from state Treasurer Nancy K. Kopp, who offered dire warnings about making the cut at a time when the state has a sizable structural deficit and mounting needs. Over five years, she said, it will cost more than $360 million to backfill the revenue lost to the tax cut.

"I've always been told that when you're in a hole you stop digging," Kopp said.

The final vote came after a lengthy debate that included repeated references to the election-year implications of a tax cut, especially for Ehrlich.

The state's first Republican governor in a generation campaigned in 2002 on a pledge that he would not increase the state's income or sales tax. In his first year in office, he voted with the board for a 60 percent increase in the state's property tax, from 8 cents to 13 cents per $100 of assessed value. That amounted to about $96 per household.

He said then, and repeated yesterday, that the increase was needed to maintain the state's high financial standing with Wall Street lenders. And even as he cast the vote for the initial increase, he pledged to refund the money later in his term.

Yesterday's cut will dial that state property tax rate back by 2 cents, to 11 cents per $100 of assessed value.

The decision brought immediate catcalls from Ehrlich's political rivals. The spokesman for Baltimore Mayor Martin O'Malley, a Democratic candidate for governor, called the tax cut "election-year policymaking." And Peter Franchot (D), a state delegate from Montgomery County who is challenging Schaefer, lumped the two together, calling them "two endangered incumbents engaging in an election-year tax cut."

Ehrlich denied that his motives were political and dismissed the idea that the needs facing the state are too great to allow for the cut.