A plan to double Carroll County's impact fee on new home construction is quickly losing its allure as a budget cure-all. While the county commissioners apparently realize that levying a $4,755 fee on each new house won't accomplish as much as they hoped, they are now left with the reality that some type of tax increase will be needed to pay for the public schools, roads and other infrastructure that were neglected during the past few years.
During last year's election, a substantially larger impact fee was sold as the remedy for the county's fiscal problems, as well as a means to control growth. After a more considered analysis, it is clear that a much larger impact fee would only marginally increase revenues and have minimal impact on slowing development.
Judging from overwhelming negative comments at a recent public hearing, higher fees on new homes don't sit well with powerful sectors of the community -- developers and home-builders -- as well as people seeking to buy new homes.
In today's political climate, elected officials consider raising taxes equivalent to touching an electrified third rail -- instant political death.
But to responsibly prepare Carroll County for the future, the commissioners have little choice except to look at increasing the real property tax rate, the "piggyback" income tax, or a mix of both.
The property tax generates about half of the county's revenues and the "piggyback" tax raises another 30 percent of them. Both are more efficient, equitable methods to raise money than doubling impact fees.
Since 1990, the county's property tax rate has been $2.35 per $100 of assessed value. Each penny of the property tax rate generates $300,000 in tax revenue. A 10-cent rise in the property tax rate -- a 4.2 percent increase -- would generate about $3 million in additional revenue.
Raising the county's "piggyback" income tax to 60 percent from its current level of 50 percent would generate $14 million in additional revenue.
Reluctance by the previous commissioners to raise taxes during the recession led to severe school crowding. It's clear that even an immense increase in the impact fee would not solve the school overcrowding problem. Until the commissioners come to grips with this, the problem will get worse.