With real estate values soaring and his state enjoying a budget surplus, Maryland Gov. Robert L. Ehrlich Jr. pledged Tuesday to renew efforts to roll back part of a property tax increase that he supported during his first year in office.
Faced with a gaping budget hole in 2003, state leaders raised the property tax by nearly 5 cents on each $100 in assessed value. Ehrlich (R), speaking here to a gathering of the Maryland Association of Realtors, said he will determine in coming months how much of that the state can afford to reverse.
"I would hope at least a penny, but I would like to go beyond a penny," Ehrlich told reporters after his remarks. "Two, maybe three."
Each penny knocked off the state's tax rate -- now 13.2 cents per $100 in assessed value -- would cost Maryland's treasury about $43 million, according to legislative analysts. For the owner of a $400,000 home, each 1-cent reduction translates into a $40 savings.
Ehrlich said he also plans to propose an increase in the homeowner exemption, a tax credit designed to reduce property taxes for low-income homeowners.
Ehrlich sought a 1-cent reduction in April but was unable to convince his two colleagues on the Board of Public Works that it was affordable. The three-member panel, which also includes Comptroller William Donald Schaefer and Treasurer Nancy K. Kopp, is charged with setting Maryland's property tax rate.
"I'm going to try to convince the treasurer and comptroller to do it," Ehrlich told the gathering of real estate brokers. "It's not going to be easy."
Fresh evidence of that was offered Tuesday by spokesmen for both board members.
Schaefer (D) has been a frequent ally for Ehrlich on other issues, but "he's still opposed to any decrease at this point," Schaefer spokesman Michael Golden said. "He just thinks that the state can't afford it right now. We don't know what the economy will look like in the longer term."
Howard Freedlander, a deputy to Kopp (D), said she "would share the comptroller's concerns," adding that a property tax cut could affect the state's bond rating or possibly contribute to future deficits.
Ehrlich said he is prepared to lobby both officials in coming months -- a potentially ticklish task with Schaefer, a former governor with a contrarian streak. Schaefer has repeatedly said that one of the reasons he likes Ehrlich is that the governor does not lean on him for votes.
"I do lobby him," Ehrlich said. "I don't leverage him."
Ehrlich acknowledged that he has little hope of rolling back the entire 4.8-cent increase approved in 2003. "I'm having a hard time getting the votes for a penny," he said with a laugh.
Depending on the size and structure of a proposed cut, legislative action also might be required because of the budget impact. Ehrlich and legislative leaders have tried to outmaneuver one another recently on the property tax levy, which they agreed to raise from 8.4 cents in assessed value to 13.2 cents in 2003.
During the past legislative session, House Democratic leaders called for rolling back the entire increase. That move was resisted in April both by Senate Democrats and Ehrlich's then-budget secretary, Chip DiPaula Jr., who dismissed the move as a "gimmick" that would lead to higher taxes or significant spending cuts later.
Later that month, Ehrlich unsuccessfully pushed the 1-cent reduction at a Board of Public Works meeting.
On Tuesday, a Democratic Party spokesman said Ehrlich's latest effort appeared to be geared to helping the governor's reelection effort next year.
"His first instinct was to tax, and now he's inclined to give a little bit back as an election-year ploy," said Democratic Party spokesman Derek Walker. "It's like setting a house on fire and trying to take credit for putting it out."
Apparently anticipating such criticism, Ehrlich told the gathering of real estate brokers here that "we're not going to do it because there's an election coming up."
Rather, he touted a tax cut as part of a pro-business agenda and a benefit of tight budget management that led to a $1.2 billion state surplus last year.
"We've restored some fiscal sanity to Annapolis," Ehrlich told the group.