After Hogan victory, local governments look to cut taxes and fees

After Hogan's victory, some local leaders look to cut taxes and fees.

In Anne Arundel County, the property tax is on the chopping block. In Howard and Harford counties, the stormwater management fee — derided as the "rain tax" — is being targeted.

Even in cash-strapped Baltimore — where a Republican hasn't been mayor since the 1960s — a new mayoral task force is studying possible tax cuts.

In the aftermath of Republican Larry Hogan's victory in the governor's race on an anti-tax message, fiscally conservative politicians from both parties see a carpe diem moment. With their colleagues who champion increased government services reeling, small-government advocates are pressing to cut taxes and fees.

"I believe the citizens of the state spoke on the issue of high taxes," said Maryland Comptroller Peter Franchot, one of the highest-ranking Democrats in the state. Franchot said he agrees with Hogan on the need "to bring the state back to the center on fiscal issues and make sure that we are controlling our debt and our spending and our taxation."

Despite having been outspent by a margin of roughly 5 to 1, Hogan swept to victory on a pledge to cut government spending and then "try to roll back" as many taxes and fees as possible. He ran up big wins in counties that elected Democrats to their county executive seats, including Baltimore County and Frederick County. Nearly 30 percent of Baltimore voters cast their ballots for Hogan.

The message resonated among city leaders.

The day after the election, the Baltimore City Council considered imposing a 5-cent fee on plastic bags, but was inundated with objections from the public. In light of Hogan's victory, Councilman James B. Kraft said he was scrapping his fee legislation and would propose banning the bags instead. "Folks have reacted strongly to the idea of paying another fee on something," he said.

Mayor Stephanie Rawlings-Blake, who had once indicated support for the bag fee, also heard the message. She said forcing businesses to pay the higher cost of paper bags would be a "backhanded tax" and vowed a veto. "I listened," she said of the election results.

In Anne Arundel, Republican Del. Steve Schuh, who was elected county executive, said he plans a 3-cent cut to the property tax. Anne Arundel's property tax rate is $0.943 per $100 of assessed value.

Owen McEvoy, a spokesman for the Schuh campaign, acknowledged that such a cut would cost the county $18 million in lost revenue. But officials say a surplus from surging property values will make up for the cut.

"Working families all over the state are fed up with high taxes," McEvoy said. "Anybody who has bills to pay has a view on taxes and fees. This cuts across party lines."

State Sen. Barry Glassman, the Republican elected as Harford County executive, said he has legislation in the works to repeal the county's stormwater management fee.

In 2012, Maryland lawmakers passed legislation requiring 10 local governments, including Baltimore and its suburban counties, to establish a stormwater fee to pay for projects to keep polluted rainwater from running off buildings, pavement and roads and into waterways that flow into the Chesapeake Bay.

The law gave the localities the flexibility to set their own rates. Harford County set the fee at $12.50 per residential tax account; the fee for commercial properties is 70 cents per 500 square feet of impervious area.

"I'm going to introduce a repeal of the rain tax," Glassman said, adding that he plans to fund cleanup efforts using other revenue available through the county's capital budget. "We're still developing how we can do it, but it's a no-brainer for me."

In Howard, state Sen. Allan H. Kittleman, a Republican elected county executive, said he wants to work with the County Council to "reduce or repeal" Howard's stormwater fee. The county charges $15 per 500 square feet of impervious surface.

"He also would be willing to look at other taxes in cooperation with the council," said spokesman Andy Barth.

But growing budget problems at the state level could slow the push for tax cuts among politicians in Annapolis, members of both parties say.

State budget analysts said last week that Maryland faces a $300 million shortfall in this year's budget, and lawmakers will need to find another $600 million to close a revenue gap in next year's budget. The shortfalls are largely due to higher-than-expected Medicaid costs and the underperformance of the housing market, analysts said.

Hogan said last week that he intends to wait until after his inauguration Jan. 21 to discuss policy plans for his administration. But Republican Del. Kathy Szeliga, the House minority whip, said she thinks Hogan is more likely to propose cuts to state taxes in later years. Szeliga does, however, expect him to promptly propose repeal of the state law that required the local stormwater fees.

State Sen. Edward J. Kasemeyer, a Howard County Democrat who chairs the Senate Budget Committee, said he doesn't see how the state could enact tax cuts this year with a $600 million shortfall to close in next year's budget.

State Sen. James Brochin, a Democrat who won re-election in a northern Baltimore County district that went heavily for Hogan, said he plans to press to repeal the law that imposes the stormwater management fee.

Brochin said he hopes Hogan's victory will serve as a "wake-up call" to Democrats statewide. "I have consistently given the message in meetings that there is no reason why we need to be the party that raises taxes," he said. "I'm hoping they get it now. It has nothing to do with our social and environmental issues. But the party is on the wrong side of fiscal responsibility."

Brochin added: "I have every intention of joining Governor Hogan in rolling back these taxes."

In Baltimore, Rawlings-Blake said she's looking for places to cut. The mayor appointed a task force last week to study whether some of the city's many taxes and fees can be reduced or changed. The 20-member Baltimore Tax Policy Study Focus Group includes developers, real estate lawyers and leaders of business associations.

"I've asked the group to put particular emphasis on our property tax rate," she said. "They will present my administration with recommendations for areas where we can move forward with possible additional tax relief."

Since Rawlings-Blake took office in 2010 with a $120 million budget deficit, she has instituted a flurry of new taxes and fees, including the bottle tax, the taxi tax, the billboard tax and the stormwater management fee. She raised rates on water bills. The mayor has said the moves were necessary to keep the city on solid financial footing and helped to improve Baltimore's bond rating.

"When we felt we could make no more cuts, we had to raise fees and taxes to get us through the Great Recession," Rawlings-Blake said.

The mayor has also won approval for a 20-cent property tax cut for city homeowners by 2020, but says she thinks she can push that lower. Because of those cuts, owner-occupied homes currently pay at an effective rate of $2.13 for every $100 of assessed value. Baltimore's base property tax rate of $2.248 for every $100 of assessed value is by far the highest in the state.

"We've come a long way," she said. "We have to look for areas where we can find more relief."

In announcing her new task force, Rawlings-Blake said she recently spoke with Hogan.

"We talked about the importance of Baltimore to the economy of the state," the mayor said. "I got the sense in our conversation that he understands how important the success of Baltimore is to the success of his administration."

Baltimore Sun reporters Erin Cox and Michael Dresser contributed to this article.

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