Howard County's decision to cap increases in property assessments at 5 percent a year drew mixed reaction yesterday, with some worrying that it could put a crimp in services and others saying it would force politicians to tell the truth about tax increases.
The County Council voted 4-1 early yesterday for the limit on assessments, which are the basis of property taxes.
The measure will cost the county $1.2 million a year in revenue, officials said. It will lower taxes for 65 percent of county homeowners over the next three years if the property tax rate of $2.45 for each $100 of assessed value remains stable, they said.
Joyce Kelly, a civic activist from Ellicott City, said she waconcerned that a 5 percent cap might force cuts in services.
"We have a schizoid process in which we reduce revenues at a time of a mounting deficit," she said, noting that the deficit this fiscal year could reach $20 million. "The proposal also comes at a time when there is a bill to eliminate the growth cap, which will result in higher infrastructure costs."
Richard H. Pettingill, president of the County Chamber of Commerce, raised the prospect that the 5 percent cap could damage the county's bond rating, which could increase the price the county pays to borrow money.
But John W. Taylor, a civic leader from Highland, said he supported the cap because "it forces the council to deal with raising the property tax rate to get increased revenues rather than go [through] the back door with increased assessments."
"In the end," he added, "I doubt if homeowners will save mucbecause the county likely will have to raise the property tax rate to cover the huge deficit the county faces."
The council passed the cap at 1:45 a.m. yesterday, after holding several lengthy hearings on other issues.
The General Assembly adopted a statewide cap of 10 percent this year and gave local jurisdictions authority to set lower limits by Jan. 1.
In May, Baltimore County became the first jurisdiction to act bsettinga cap of 4 percent. The city of Baltimore recently adopted an identical cap, while Harford County set its limit at 6 percent, and Anne Arundel and Carroll kept theirs at 10 percent.
Howard County Council Chairman Chairman C. Vernon Gray, D-3rd, was the lone member to vote against the 5 percent cap and the only one among the five to vote for a bill that would have set the cap at 10 percent.
"With a hemorrhaging budget deficit, we should put in a 10 percent cap to see where we are," Mr. Gray said. "In the future, it may be feasible to move it to less than 10 percent, but it should be phased in gradually because we don't know what the short-term impact will be on the operating budget."
Councilman Darrel E. Drown, R-2nd, suggested setting the cap at 6.2 percent, which he said was the average consumer price index for the past 20 years. That compromise measure was voted down 2-3, with Councilman Charles C. Feaga, R-5th, supporting Mr. Drown.
The 10 percent cap would have cost the county only $195,000 a year in revenue and would have brought relief to only 13 percent of the county's homeowners over the next three years if the tax rate remains stable, officials said.
Increases in the assessed value of a home are phased in over three years, and under the cap they may not rise by more than 5 percent a year. That means the owner of a $150,000 home with an assessment that would have risen to $190,000 without the cap would save $223 over the three years -- $24 the first year, $76 the second and $123 the third, said Budget Officer Raymond Wacks.
That same homeowner would not have saved anything under a 10 percent cap because the assessment would not have risen by more than 10 percent in any of the three years, Mr. Wacks said.
The bill to set the assessment cap at 5 percent was sponsored earlier this fall by Mr. Feaga, but at the urging of former Executive Elizabeth Bobo, the council voted to delay action until after the Nov. 6 election.
Mr. Feaga reintroduced the bill after his re-election, while Councilwoman Shane Pendergrass, D-1st, proposed a measure setting the cap at 10 percent to give the council more leeway in a slumping economy.
Both she and Mr. Feaga wound up voting for the 5 percent cap.
County Executive Charles I. Ecker endorsed the cap, saying it amounted to "truth in taxing" because it would require the county to raise the property tax rate to generate revenue rather ++ than relying on rising assessments.
Area tax caps
Here are the annual limits on property assessment increases adopted in the metropolitan area.
Baltimore: 4 percent cap
&Baltimore; County: 4 percent
Anne Arundel: 10 percent
Carroll County: 10 percent
Howard County: 5 percent
Harford County: 6 percent