The taxman cometh, but with mercy for a change Assessments rising by the least in years

Two years of recession brought good news for many Maryland homeowners this week -- new property tax assessments showing the lowest average increase in several decades.

Of assessment notices newly mailed to 615,000 property owners, nearly 40 percent showed either no change or a decrease to below 1989 values.


The good news for homeowners is bad news for local government officials -- the low assessment increases mean less growth in property tax revenue for the next several years. That will boost pressure on local elected officials to raise property tax rates, or to find other sources of revenue.

William A. Saltzman, assistant to the director of the State Department of Assessments and Taxation, said this year's average increase -- 0.6 percent -- is the lowest in 20 years. He said the recession is the reason.


Last year, the average statewide assessment increase was 7 percent. In 1984, property values rose an average of 17.3 percent.

In Maryland, one-third of the properties in each local jurisdiction are reassessed each year.

Carroll County's average assessment increase of 3 percent was the largest in the Baltimore metropolitan area this year.

"Characteristically, the reassessment has been 10 percent," said county Budget Director Steven D. Powell. "We'll expect a lower increase in real estate tax revenues for [fiscal year] 1994."

Howard County saw a 2 percent increase, Anne Arundel a 1.8 percent increase and Harford a 1.7 percent increase.

Baltimore had an average assessment increase of .7 percent, while Baltimore County properties increased an average of 0.5 percent.

Montgomery County, the wealthiest county in the state, saw its average assessment drop 2.6 percent this year from the 1989 assessment. That was the biggest drop in the state. Montgomery County also will have 39,000 fewer properties qualifying under its 10 percent cap. Talbot County had an average assessment decrease of 1.6 percent.

In Baltimore County, 57 percent of the properties reassessed showed either no increase or a decrease in value.


"We finally got it through their thick skulls that they over-assessed us. It was unfair," said David E. Boyd, Baltimore County's most vocal tax opponent.

In Baltimore County, the notices were being received by many of the taxpayers who led a citizen revolt against higher property taxes and sharply higher assessments. Their efforts helped defeat an incumbent county executive and five County Council members in the 1990 elections.

"We're finally reaping a little of the spoils of our own victory," said Mr. Boyd, a northern Baltimore County resident who founded Property Taxpayers United.

Interestingly, the average increases are lower in most counties than the local assessment cap that politicians had imposed.

Baltimore County's 0.5 percent average assessment increase is far below the county's 4 percent cap. This means county coffers will not be growing as fast as expected. County budget officials will use the new assessment information to help plan their budgets for the fiscal year that begins July 1.

Fred Homan, the county's budget director, said he was expecting smaller assessment increases this year, but not as small as what emerged.


"We were expecting slower growth, but this is slower than we expected," he said.

The county's assessable tax base also has slowed and will grow only 3.7 percent. That compares with growth rates as high as 12 percent during the last 20 years.

Mr. Saltzman said Baltimore's total assessable base will increase only 1.2 percent next year. The assessable base is the value of all real property on which property taxes are based.

Since fewer Baltimore County taxpayers will be benefiting from the assessment cap, taxpayers there will reap fewer tax credits next July when local tax bills are mailed. In Baltimore County, 20,000 fewer properties will qualify for tax credits.

In Charles County, a fast-growing bedroom suburb of Washington, assessments are growing faster than anywhere else in Maryland this year. There, 13,000 more properties will qualify for tax credits under the 5 percent cap. Charles County assessments increased an average of 7 percent.

Throughout the metropolitan area, local officials weren't too surprised by news that assessments were lower than in previous years.


* BALTIMORE -- The 1.2 percent increase in Baltimore's assessable base did not come as a surprise to city budget officials, who now are in the process of preparing the budget for fiscal year 1994, which begins July 1, based on these figures.

"We did not expect that the base was going to increase much at all," said Budget Director Edward J. Gallagher, Baltimore's budget director. "We were looking at a growth in the assessable base of under 2 percent."

"We didn't plan on a growth of any magnitude," Mr. Gallagher said.

Last year, about 8,800 home owners in some of Baltimore's most affluent neighborhoods had their property assessments reduced an average of 10 percent to reflect the depressed real estate market. State assessors made the unusual reductions after finding that its 1991 assessments were substantially higher than the values of homes sold in the last months of the year.

Douglas E. Brown, public policy analysis supervisor with the city Department of Finance, said budget officials first saw the indication of a downward trend in assessments last year, with the state's new figures for that one-third of the city that traditionally yields the highest amount of property tax revenue.

The properties in the so-called "Group One" include those in the northern one-third of the city, as well as properties in the central business district, Mr. Brown said. Those indications prepared them for this year's continued downward trend, he said.


Last year, finance officials counted on only a 2.4 percent increase in the assessable base for the current city budget -- substantially below growth rates in prior years. In fact, during the 1980s the average annual increase in the city's assessable base was 6.8 percent -- not far below the statewide average of 8.4 percent, budget officials have said.

Property taxes are the largest revenue source for the city, accounting for 25.5 percent -- $477 million -- of the current $1.9 billion operating budget.

* CARROLL COUNTY -- Although the county's assessments increased more than did those in many of the surrounding counties, the re-assessment was lower than in previous years.

Still, Carroll County budget director Steven D. Powell said he expects the assessment will be slightly higher than 3 percent, because the state re-assesses only one-third of the county each year.

Of the 17,000 properties that were reassessed, most of the homes in the $75,000 to $150,000 range increased in value, said Mr. Saltzman of the state Department of Assessments and Taxation. Those in higher price ranges either stayed the same or decreased in value.

"Homes in the $150,000 to $200,000 range were not moving very well," he said.


But the home market in Carroll County has not been stagnant, he said. Some 3,441 properties were sold between Jan. 1, 1991, and Nov. 1, 1991. During the same period in 1992, 4,369 properties were sold.

"That's a 27 percent increase," Mr. Saltzman said. "That doesn't show a dead market."


In the north county area receiving notices this year, assessments will increase only an average of 5.4 percent since property owners last received notices three years ago, the lowest increase in more than a decade, said William Smouse, assistant supervisor for the county office of Assessments and Taxation.

The reassessment covers about 53,000 homes and 6,000 commercial properties in the northern and western parts of the county, including Brooklyn Park and Linthicum. Although the area includes a small portion of waterfront property along the south and west banks of the Severn River, "the vast portion of this is inland property, properties of more modest valuation," Mr. Smouse said.

The county has seen a decline in the rate of assessment increases over the past two years. The area that was reassessed last year, which included large sections of waterfront property in the eastern county sections of Pasadena and the Broadneck Peninsula increased by an average of 27 percent.


Two years ago, assessments in Annapolis, South County and some western communities such as Crofton increased an average of 48 percent.

An estimated 36,000 more properties will qualify for a tax credit under Anne Arundel County's new 4 percent cap, which was lowered this year from 10 percent.

* HARFORD COUNTY -- Larry Klimovitz, director of administration for Harford County, said he had not received a copy of the state assessment report and could not comment on it in detail.

He said county officials had been told that the average annual increase in assessments would be about 4 percent -- not 1.7 percent as reported by the state.

"We were told assessments were moderating," Mr. Klimovitz said. "That's a lot more moderation than we were told."

* HOWARD COUNTY -- "This is not a surprise to us," said Howard County Budget Administrator Raymond S. Wacks. "We've been saying this all along."


During the recession, increases in the assessable base provided the county's only growth, Mr. Wacks said. "It kept us going when all other sources of revenue were not following suit." In the coming fiscal year, however, the assessment increase will not be enough to balance the budget, Mr. Wacks said. "We will have to increase the [property tax] rate or cut expenditures."



Annual average increase

Allegany... ... ... .. 3.4%

Anne Arundel... ... ... .1.8


Baltimore City... ... . 0.7

Baltimore County... ... 0.5

Calvert... ... ... ... .3.9

Caroline... ... ... ... 2.2

Carroll... ... ... ... .3.0

Cecil... ... ... ... .. 2.8


Charles... ... ... ... .7.0

Dorchester... ... ... . 1.3

Frederick... ... ... ... 3.0

Garrett... ... ... ... . 3.1

Harford... ... ... ... . 1.7

Howard... ... ... ... . 2.0


Kent... ... ... ... ... 2.7

Montgomery... ... ... . 2.6

Prince George's... ... .2.6

Queen Anne's... ... ... 1.9

St. Mary's... ... ... . 5.5

Somerset... ... ... ... 3.6


Talbot... ... ... ... . 1.6

Washington... ... ... . 5.5

Wicomico... ... ... ... 0.4

Worcester... ... ... .. 3.1

STATE AVERAGE... ... .. 0.6