Property tax surcharge may continue; Owens says county cannot afford to kill added fee; $1.5 million would be lost; Executive's position defies pressure by Republican delegate


Property owners who pay taxes semiannually will likely continue to be charged a fee of $15 or $20 a year, because County Executive Janet S. Owens says the county cannot afford to eliminate the surcharge.

Eliminating the fee would cost the county about $1.5 million, and Owens says that would cover salaries for 37 teachers.

Owens explained her decision not to support a change in a letter to Del. John R. Leopold, a Pasadena Republican who has pushed her to eliminate the added fee to help homeowners and homebuyers.

Owens' stance, combined with the County Council's apparent reluctance to alter the policy, probably means that the surcharge will continue.

"I appreciate your perspective on this issue, but given the citizens' demand for services, Anne Arundel County is not able to absorb this loss in revenue," Owens wrote in her letter to Leopold dated Monday.

She noted that her position against a change was not altered by the recent elimination of such fees in Montgomery and Baltimore counties, both of which have larger budget surpluses than Anne Arundel's approximately $20 million. Howard County also has decided to end the fee, Leopold said.

Owens noted that Anne Arundel's property tax rate is lower than those of Baltimore and Montgomery counties, as is the county's local income tax rate.

The fee on semiannual tax payments is designed to make up for investment income the county loses by not receiving full tax payment in September and by having to mail two bills instead of one. Leopold has argued that the county could make up for the lost revenue by streamlining its bureaucracy.

He pointed out that Owens recently supported state legislation requiring that workers be paid "prevailing wages" on certain school construction projects.

The new law could raise the county's costs, Leopold said.

"That's where this could have been saved," he said.

A bill was introduced in the General Assembly this year to abolish the fees for semiannual payers, but it died in committee.

The General Assembly previously made semiannual payments the standard method of collecting property taxes as a way to lower closing costs for homebuyers.

It reduces closing costs because homebuyers pay less upfront into an escrow account to cover the coming year's taxes.

Breaking down the numbers

Homeowners who switch from annual payments can get a one-time refund worth six to eight months of property taxes, depending on how much money they put in escrow when they bought the house.

Unless a homeowner chooses otherwise, taxes are due in twice-yearly installments rather than once a year. To pay once a year, homeowners must notify the state in writing by May 1.

The surcharge does not apply to those who choose to pay once a year.

Changing the schedule for paying taxes hurt local governments.

When governments collected property taxes once a year, they put the money in interest-bearing accounts until they needed to spend it.

The General Assembly let counties levy a surcharge of up to 1.65 percent of the semiannual tax bill to recover the lost interest.

Owens says she expects the county to set the rate at 1.55 percent for the fiscal year starting July 1.

Like installation payments

For the owner of a house assessed at $60,000, the fee would be $14, Owens said.

"Philosophically, the imposition of a service fee on semiannual taxpayers is no different than the practice utilized in the private sector for installation payments," Owens wrote in her letter.

"If you were to pay your own automobile insurance premiums on a monthly basis," she added, "your insurance carrier would charge you a service fee."

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