www.baltimoresun.com/news/maryland/sun-investigates/bs-md-tax-credit-audits-20120627,0,4386281.story

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State auditors looking into homestead credit

Team arrived at agency headquarters two weeks ago

By Scott Calvert, The Baltimore Sun

6:49 PM EDT, June 27, 2012

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State auditors are examining how well Maryland's assessments agency has managed the homestead property tax credit, a popular tax break for homeowners that has come under increased scrutiny since The Baltimore Sun revealed that hundreds of city owners were improperly receiving multiple credits.

Auditors have been at the Department of Assessments and Taxation for the past two weeks, said its director, Robert E. Young. The goal is to complete a review of the homestead credit program in time for next year's General Assembly session, which starts in January, according to chief auditor Bruce Myers.

A separate team of state auditors will soon begin a second, broader review of the department — the long-scheduled "fiscal/compliance" audit that all state agencies go through every three years.

This week Del. Samuel I. Rosenberg, a Baltimore Democrat, asked that the broader audit include an examination of problems with a different tax break: Baltimore's historic property tax credit. His request was spurred by a Sun article last weekend describing how chronic errors in calculation have cost the city millions of dollars in potential tax revenue.

The recent revelations prompted calls from city and state legislators for audits of both the state agency and the city's Finance Department, where top officials failed to catch the calculation errors despite warnings in a 2001 internal memo.

MayorStephanie Rawlings-Blakehas not said whether she supports an outside audit of the city's handling of tax credits, though the new budget has money for two additional positions in the Finance Department's billing integrity program.

At the state level, Rosenberg has taken an active role on tax credit issues from his seat as vice chairman of the House Ways and Means Committee. He sought and received the homestead credit review from the legislature's Joint Audit Committee.

Young said Wednesday that he's "comfortable and confident the department will receive good remarks from the auditors."

Auditors have spent time at agency headquarters on Preston Street and visited its offices in Baltimore, Anne Arundel County and Worcester County, he said. The homestead program, open to homeowners across the state, effectively caps annual tax increases.

In January, state officials revoked tax breaks from more than 550 homes in Baltimore after a Sun analysis showed that hundreds of owners had been receiving the homestead credit on multiple houses. Under state law, an individual or married couple is entitled to a credit on just one house.

As a result, those owners owed a combined $730,000 in additional property tax for the current year. Because the city also revised tax bills for earlier years, the total was expected to approach $3 million.

scalvert@baltsun.com

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