In the cover letter to his 2019 budget proposal, County Executive Allan Kittleman notes his administration’s ability to keep property tax rates from increasing this year.
It’s the same sentiment from last year’s budget, when Kittleman wrote that the county was “holding the line” on taxes.
Why will some residents see an increase in their property tax bill this year?
The answer in part hinges on the county’s decision not to implement the state’s constant yield tax rate, a state calculated rate that if applied to a local jurisdiction’s property assessment base, would result in collecting the same amount of revenue as it did the year before, even as the value of properties rises.
Howard County this year, as in years past, did not follow the state calculated rate, 99.76 cents per $100 of assessed property value. Instead, it maintained the same rate as it has since 2007: $1.014 per $100 of assessed property.
So, as the assessed value of properties increases, tax bills will go up, even if the rate stays the same. In some cases, if the county adopted the constant yield recommendation, bills could stay the same or drop.
Tax bills for the new year are traditionally mailed in July.
When the county changed the rate more than a decade ago, it was lowered from $1.044 to $1.014.
By maintaining the same rate, the county is slated to bring in an additional $8 million in tax revenue, County Council chairwoman Mary Kay Sigaty announced a public hearing in May. The hearing is required by law when the county adopts a property tax rate that is above the state-mandated constant yield figure.
Properties are reassessed by the state every three years. For the most recently assessed Howard County properties, the increase was 5.9 percent, which will be phased in at slightly less than 2 percent for the next three years, according to Howard County budget director Holly Sun.
The issue of the constant yield tax rate is an inherently political one, said Eric Kasoff, a property tax attorney with the Washington, D.C.-based real property tax firm Wilkes Artis. For politicians who are more anti-tax and want to “starve the beast” of the local government to have it run on the same amount of money each year, Kasoff said they tend to favor lowering the rate in order to keep the tax base the same.
But for politicians who favor more taxes, they may choose not to heed the state’s rate. If administrations do maintain the rates and therefore allow taxes to increase, Kasoff said local politicians often place the blame on the state for raising the assessment rate of properties, rather than admitting that the local decision resulted in a tax increase.
“I don’t think you can ever avoid the fact that this is a political question because this is the fundamental political question that led to the formation of the United States of America, the history of this country is all about no taxation without representation,” Kasoff said.
When asked about the tax increase in an interview, Kittleman was quick to say that it wasn’t a tax increase, but an increase in the tax rate. The County Council is required to hold a public hearing and ultimately approves the rate. Sigaty said that by holding the rate constant from year to year, it allows property owners to plan their budgets ahead.
“I think that holding government steady requires us to be able to meet the increased cost of government and that by holding the tax rate steady and having an increase in assessment value, then it allows for us to be able to continue services at the level that we currently have them,” Sigaty said.
If a county is considering a tax rate higher than the constant yield, it must first hold a public hearing and advertise a property tax rate increase. At this year’s public hearing on May 7, sandwiched between a legislative session and a Zoning Board meeting, only one person spoke, Laurel resident Brent Loveless.
Loveless, a lifelong resident who comments regularly at public hearings, supported the increase in the rate. He testified that the money was needed to support vital county services, but he urged council members to “use this income wisely.”
Kasoff said it’s time for politicians to own up to the fact that the rate results in higher taxes. As leaders, he said he believes politicians need to be upfront about the debate over how to spend government money.
“When politicians hide behind this kind of deception, they do our citizens a grave disservice. We don’t want anybody to hide behind a nuanced and complicated concept to claim that there’s been no tax increase,” Kasoff said. “They need to know that this is a fundamental question to our republic. Our politicians in my mind need to be forthright about the debate and to see this for what it really is, which is the inherent balancing of interests.”