The region's economic downturn might have taken the sting out of rising real estate prices, but it will be another year or so before Howard County homeowners see the effect in their property assessments.
Homeowners whose property is being reassessed this year can expect property values to rise on the average between 8 percent and 10 percent a year during the next three years, said Charles Baker, a state supervisor of assessments for Howard County.
That's because the new assessments are based on 1989 sales data, a period when sales were still strong, Baker said. "There's always some lag," he said.
Maryland law requires that homes be assessed every three years, on a rotating basis. This year, about 19,155 houses in Elkridge, east Columbia and the southeast corner of the second councilmanic district are being assessed for the first time since 1987.
An increase in property values almost always leads to higher tax bills, but how much higher remains in question, county officials said. County Council members this week introduced two bills to limit the assessment rate. One bill would limit the increase in taxable assessments at 10 percent; the other would limit it at 5 percent.
The bills are the result of action by the Maryland General Assembly, which, during its last session, directed counties to set a tax increase ceiling of no higher than 10 percent by Jan. 1.
Counties may set a lower limit, as Baltimore, Kent and Harford counties already have done.
If the county limits taxable assessments at 5 percent, it would provide some relief to about two-thirds of the county's homeowners and reduce revenue by about $1.27 million, said Raymond S. Wacks, county budget administrator. A 10 percent limit would cut revenue by $195,000 but provide relief to only about 13 percent of the county's homeowners, he said.
Under a 10 percent limit, for example, the owner of a $200,000 home, facing an 8 percent assessment increase, would be billed $2,117, or $150 more than last year. Under a 5 percent limit, the same homeowner's bill would increase about $100 to $2,102, according to rough estimates, Wacks said.
Under state law, the assessment limit applies only to those who live in their own homes, have not made major additions and have not sold the property in the previous year.
Council member Charles C. Feaga (R-District 5) began pushing for a 5 percent limit after homeowners in his western district complained about large increases in their assessments earlier this year.
He has called his bill "truth in taxing" legislation, saying it would force council members to rely less on assessments when searching for new revenue sources and make them confront the issue of higher tax rates.
Council members, he said, frequently are not held accountable for rising assessments, which are determined by the state. By putting more pressure on council members to increase the tax rate if they want to increase spending, Feaga said, he hopes council members will look harder for ways to cut the budget.
Feaga has picked up support from County Executive Charles I. Ecker (R), who has said he will testify in favor of a 5 percent limit. But Feaga still must win over some of his fellow council members, who say the economic downturn may make this a bad time to limit the council's money-raising options.
The county already is wrestling with a budget deficit that could reach $18 million by the end of the fiscal year, and drafting next year's budget may require the politically unpopular task of raising taxes and cutting services, Ecker said.
To shift some of the burden for revenue-raising from the property tax, the new county executive recently said he would seek state authority to impose a 5 percent tax on hotel and motel visits.
Council member Shane Pendergrass (D-District 1) introduced the legislation for a 10 percent limit to ensure that the county will comply with state law if the council fails to approve a 5 percent limit. She said she has not decided how she will vote on a 5 percent limit.
Council Chairman C. Vernon Gray (D-District 3) has opposed the 5 percent limit because he said it would reduce the county's flexibility to raise revenue at a time when it will have trouble enough making up for any shortfall. "If the financial picture improves, we can always reconsider lowering the cap," he said.