For the third straight year, many Maryland homeowners are getting good news in the form of flat or lower property tax assessments. The average increase statewide is .6 percent.
That represents a tiny rise from last year, when the statewide average was zero increase. The flat trend of the last three years contrasts sharply with the average 7 percent increase of 1991 and the 17.3 percent average increase of 1984.
More than half of the 590,000 notices mailed today will show no change or a reduction below 1991 levels, said Ronald W. Wineholt, acting director of the state Department of Assessments and Taxation. Another 20 percent of the notices will show increases of less than 5 percent for the next three years.
"The notices . . . are a reflection of the real estate market, where value appreciation for the typical property has slowed dramatically in recent years," Mr. Wineholt said. Despite the trend, all jurisdictions still will experience at least small increases in their total assessable tax bases.
One-third of Maryland's 1.8 million properties face reassessment each year, and the new values are imposed over three years.
The current trend in assessment increases has rendered almost irrelevant assessment caps adopted in Maryland in 1990, after an uproar that year about sharp rises. The General Assembly adopted a 10 percent cap on annual assessment growth, and several counties adopted local caps that go lower.
But with Allegany County the assessment growth leader this year with an average 2.2 percent increase, no jurisdiction even approached the most stringent cap in effect. In Talbot County, where assessments aren't permitted to rise at all under local law, the average assessment decreased .7 percent from last year. Most jurisdictions experienced little change. The lower assessments have sharply reduced the number of appeals. Only 35,000 were filed in 1994, compared with 67,000 in 1991. Property owners have until Feb. 13 to appeal today's reassessments.
The good news for homeowners is bad news for local governments, because lower assessments mean less property tax revenues, and more pressure to raise property tax rates. That's a particularly difficult problem in Baltimore City and Baltimore County, where political pressures are intense to keep tax rates down.
With elections looming next year, several city officials have vowed to cut 5 cents off the $5.85 tax rate there. That would cost the city another $4 million.
In Baltimore County, County Executive C. A. Dutch Ruppersberger III has said he will not raise property tax rates, despite lower than expected income tax revenues that have created a projected $3.9 million deficit this year.
Baltimore County Budget Director Fred Homan said the small average assessment increase -- .8 percent -- was expected. "We revised our estimates last year," he said, predicting that things won't begin to improve until 1997 at the earliest.
Baltimore County's property tax revenues are expected to go up by $10 million for fiscal 1996, which begins July 1, over this fiscal year. In contrast, county property tax revenues jumped $29 million between fiscal 1991 and fiscal 1992.
Western sections of the county were reassessed.
The state's figures also evoked no surprise at City Hall in Baltimore, which had a .5 percent increase. The northern third of the city where there are many higher-valued homes was reassessed.
"This is pretty much in line with what we expected," said Baltimore Budget Director Edward J. Gallagher. "We were hopeful of more growth than there was."
He said the city has to pay $4 million in refunds to owners of huge downtown office buildings where values have declined because of the recession and high vacancy rates. Property tax revenues also are expected to be $3.1 million lower than budgeted because of lower commercial assessments.
Anne Arundel County, where the northeastern county north of Annapolis was re-assessed, showed the most improvement in average assessments in the metropolitan area since last year, moving from a decrease of .5 percent to an increase of .5 percent. .
"I think real estate activity in the county has shown some life within the last 12 to 18 months," said John Hammond, Anne Arundel financial officer. "It's the same old story. The assessment is half the equation and under the tax cap we're sort of locked in to the amount of money we can raise through property taxes."
In 1992, Anne Arundel voters approved a slightly different tax cap than the assessment cap in force throughout the rest of the state since 1990. Total revenues cannot increase more than inflation, or 4.5 percent, whichever is less. Inflation this year is 3 percent, leaving County Executive John G. Gary some room for a property tax increase.
In Harford County, where assessments grew an average 1.2 percent for the northern and most rural section, Director of Administration Larry Klimovitz said the figures provide "further indication of the economy continuing to slow down." County administration spokesman George Harrison said there is no plan for a property tax rate increase in fiscal 1996.
Even in fast-growing Howard County, the assessment average was almost unchanged.
Senior budget analyst Gale Benson said the northeastern area of the county re-assessed this year had shown an increase of 15 percent to 20 percent when last assessed in 1991.
"This is kind of new to us," Ms. Benson said, noting that, with the state's three-year assessment cycle, "we won't be seeing a real change until 1999."
In Carroll County, the average assessment was slightly lower this year than last, even though the section surveyed included the developing Eldersburg area.
"Things have very much slowed down," Budget Director Steven D. Powell said. "Building permits are down over 30 percent from last year."
John D. O'Neill, president of the Maryland Taxpayers Association and an active opponent of property tax increases, said his worry is government spending, not the tax rate.
Mr. O'Neill said that in Baltimore County, where he lives, there is plenty of room left to cut school spending -- despite increasing enrollments -- and to trim costs in other ways. He said school officials "spend like drunken sailors on capital programs," pushing up interest costs for bond borrowing. Also, county workers should be made to work 40 hours a week instead of 35 or 37 hours, Mr. O'Neill said.
Harold Lloyd, who heads the north county's Property Taxpayers United Group, said the normal growth in the Baltimore County tax base from new construction should provide any financial cushion needed.
"I think Mr. Ruppersberger will be very very careful about the budget," he said. "He won't tamper with the tax rate."
Mr. Lloyd urged homeowners to obtain copies of their assessment work sheets, especially pre-computer work sheets, even if they are satisfied with their notices to make sure no mistakes have been made.
In the metropolitan area, the sections assessed this year were:
* Anne Arundel County -- From the Baltimore City line south to the Severn River, and west to Route 3.
* Baltimore City -- Northern city neighborhoods east to west, plus a small section downtown north of the Inner Harbor.
* Baltimore County -- From Baltimore City's western boundary to Howard County and northwest toward Carroll county.
* Carroll County -- Southern areas, bordered by Baltimore County on the south and Frederick County to the west.
* Harford County -- Northern sections to the Pennsylvania line and the Susquehanna River on the east, including Havre De Grace.
* Howard County -- Northeastern section, including Ellicott City, West Columbia and west of Ellicott City along the Baltimore County line to Carroll County.