Tax Boost Approved For Prince George's

Seeking to overcome a potential budget shortfall of nearly $100 million in the tightening economy, the Prince George's County Council voted yesterday to raise the county's income tax and the recordation tax levied on home sales.

The council members voted 8 to 0 with one abstention, offering no public comment as they approved the two tax increases that were proposed by County Executive Jack B. Johnson (D). The panel is scheduled to vote on Johnson's proposed $2.67 billion budget today.

The county's income tax rate will rise Jan. 1 from 3.1 percent to 3.2 percent, the highest rate allowed by state law. The rate had been 3.2 percent until it was cut in 2006. Raising the tax will cost an average household an additional $40 a year and provide county government with $13 million annually, officials said. The average household payment this year was about $1,322.

The recordation tax, applied when homes change ownership, will increase July 1 from $2.20 per $500 of home value to $2.50 per $500. Without further council action, the recordation tax increase will expire in three years.

Even with the change, the county will have the lowest recordation tax in the state. However, Prince George's has the second-highest transfer tax in Maryland, another fee applied to home sales. The recordation increase is expected to raise $5.4 million in fiscal 2009 and add $180 in taxes to the sale of a $300,000 home.

In a statement, County Council Chairman Samuel H. Dean (D-Mitchellville) said the council did not make its decision lightly.

"In these tough economic times, it is the responsibility of the County Council to address the realities of the current economy and make the difficult decisions to improve the quality of life for our residents," he said. "The affirmative vote was necessary to ensure public safety, properly fund education and provide other services critical to County residents."

On the income tax, he said, "We are still within the parameters set by the state and are optimistic that we can once again lower the income tax rate once this storm has passed."

After voting on the tax proposals, Dean declined to be interviewed, indicating he would make no comment until the council adopts the budget today. When told by a reporter that it is unusual to pass a tax increase without immediately explaining the reason for doing so, Dean said, "Be surprised -- now you've seen it."

But in his statement, issued later in the day, Dean said the council "is working diligently to do more with less and looking for creative ways to cut spending so we lighten the burden on residents as much as possible."

The one council member who abstained from the vote was Andrea Harrison (D-Springdale), who was elected May 6 and sworn in Monday. In a statement, she cited her status as a newcomer, saying, "To cast a vote, especially on such critical issues, without all the facts, would not be a wise decision for any member of the Council."

Johnson applauded the council's vote and said his budget, which includes a 1.3 percent spending increase, was designed to maintain core services such as education and public safety.