Consider the ripple effect of falling property tax bills


A FACT most taxpayers in Anne Arundel County probably don't know:

If you account for inflation, the average property tax bill is smaller today than six years ago.

In fiscal year 1999, which begins July 1, the county budget office estimates that the average Anne Arundel homeowner will pay $1,455 in property taxes. That is $74 less in constant dollars than in 1993.

The significance of this factoid, buried in the county's 1999 budget book, is good news for Anne Arundel homeowners. Relative to inflation, residents' property tax bills are dropping.

Heavier burden?

So much for the argument that the local tax burden is getting heavier, the mantra in many communities.

If one reader I heard from last week is representative, I would wager that most taxpayers believe they are paying substantially more in taxes these days.

Her tax bill is three times what it was when she and her husband bought their home a couple of decades ago, she said.

Of course, the value of her home is probably three times greater, too. Since property taxes are based on the estimated worth of a property and its improvements, they invariably track the increase in values.

It is true that in nominal terms taxes have gone up. The county's own statistics substantiate this. In 1993, the average taxpayer paid $1,307 in property taxes. In fiscal year 1999, the bill will be $1,455.

But comparisons of nominal amounts are apples and oranges. The dollar doesn't maintain a constant value from year to year. Simply put, a dollar today doesn't buy what it used to.

Inflation drop

Inflation has dropped considerably since the early 1990s to the current minuscule level of 0.6 percent, as measured by the Washington-Baltimore consumer price index. Adjusting for that change, it is fair to say that, on average, the property tax burden for Anne Arundel residents has plateaued and possibly headed lower.

This is great news for taxpayers, but bad news for the elected officials who have to run the county.

Imagine trying to run a household in which the income is static. Indeed, there are county households where wage earners haven't seen raises for years. And many of them struggle because while inflation remains low, the costs of existing in this society increase. Children need new clothes and shoes. Cars sometimes need expensive repairs. Insurance premiums and cable television rates climb.

What is true for households is true for government -- with a twist. The costs of running the county government are destined to climb each year, not because the county executive and the council are profligate spenders.

Why government costs more

The cost will climb because government, by its nature, is a labor-intensive, service-oriented activity.

Education and public safety are the two costliest services the county provides. Forty-three percent of the county's budget is devoted to education. Public safety consumes another 19 percent.

About three-quarters of the education budget is for personnel: teachers, principals, counselors, librarians, custodians, bus drivers, cafeteria workers. Salaries also dominate spending for police, as well as health, planning and code enforcement departments.

The only way to keep the payroll static is to eliminate a certain number of employees each year to offset the raises.

Such a strategy would result in deteriorating services, with fewer people to handle the same -- or increasing -- load of work.

Compensation is not the only county expense that increases. So does the price of other goods, including vehicles, electricity and fuel. More population also drives up costs -- and Anne Arundel is a growing county.

Anne Arundel is one the state's wealthiest jurisdictions, yet the recent debate over the budget made it sound like one of the poorest, especially in terms of funding the schools.

If this county is having trouble making ends meet during these flush times, what will happen when the economy sours? Having a tax base collection system that shrinks during economic expansions is likely to shrivel further during economic contractions.

Then, the tax burden will be the last thing county residents complain about.

Brian Sullam is The Sun's editorial writer in Anne Arundel County.

Tax shrinkage

Year.. .. .. .Average.. .. ..In constant

.. .. .. .. bill .. .. .. .dollars

1990.. .. .. .. $1,029 .. .. .. . $1,373

1991 .. .. .. . $1,086 .. .. .. . $1,377

1992 .. .. .. . $1,193 .. .. .. . $1,432

1993 .. .. .. . $1,307 .. .. .. . $1,529

1994 .. .. .. . $1,318 .. .. .. . $1,494

1995 .. .. .. . $1,348 .. .. .. . $1,490

1996 .. .. .. . $1,404 .. .. .. . $1,510

1997 .. .. .. . $1,431 .. .. .. . $1,498

1998 .. .. .. . $1,452 .. .. .. . $1,475

1999 (est.) . . $1,455 .. .. .. . $1,455

Source: Anne Arundel County

Pub Date: 6/14/98

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