Neall urges tax rise


State Sen. Robert R. Neall is urging the County Council to raise the property tax rate to the maximum allowed under the voter-approved tax-revenue cap. Otherwise, he warns, the General Assembly may be less generous when Anne Arundel goes looking for state funding next year.

Neall's call is not likely to make a big difference. County Executive Janet S. Owens, a Democrat, is firmly opposed to an increase, especially with an election 18 months away, and the council seems happy to follow her lead.

Still, Neall's suggestion at Monday night's public hearing on the budget disappointed Owens, who said it amounted to unwarranted second-guessing. Though he did not mention her by name, it was clear he was criticizing her decision to forgo $6.8 million in new tax dollars that would be generated by a rate increase of 1.8 cents per $100 of assessed value.

A 1.8 cent increase is the maximum allowed under the revenue cap. The 1992 cap law says that the county's revenue from property taxes cannot grow per year more than the annual rate of inflation or 4.5 percent, whichever is lower. The current tax rate is 96 cents per $100 of assessed value.

Neall, a Crofton Democrat who was a Republican county executive in the early 1990s, said the council should take full advantage of the cap's annual allowance. If not, he said, the effect will be felt forever: Next year's revenue will be less than it could be, meaning revenue growth the year after that will be smaller than it could be.

"If we deny ourselves money in any one year, we deny ourselves in perpetuity," he told the audience inside the packed council chamber. Later, he said that even if the council did not want to spend the money right away, it should raise the rate and put the additional funding in a reserve fund.

Neall says state legislators will be watching. "I think it's possible they may look at Anne Arundel County's request to the state and say, 'Since you're not using the amount allowed under the local revenue cap, then obviously you didn't need the money,' " he said in an interview yesterday.

Owens, who wasn't at the hearing, said, "I think it's rather unusual because he sat once upon a time in my seat, and he knows full well the demands and competing forces that come into play. I wouldn't second-guess him, and he shouldn't second-guess me."

Owens and the council raised the property tax rate by 4 cents last year, and she said this spring that she would probably recommend an increase of 1.8 cents (4.5 cents under the old tax formula) because of what she calls a grim fiscal picture.

But last month, the county executive said she would not raise the rate after all, mainly because it would hurt poorer residents. Also, elections are next year, and some council members "told me in advance they wouldn't support my raising taxes," Owens said.

One of them was Daniel E. Klosterman Jr., a Millersville Democrat who supported last year's tax increase along with five of his six colleagues. Klosterman remains opposed to another increase but said Neall is "absolutely right" philosophically about the downside to not raising the tax rate as high as the cap allows.

Klosterman acknowledged that the point of the cap was to guide increases. And the county's property tax rate is the lowest in the Baltimore area, as Owens likes to boast.

But Klosterman said voters tell him they oppose any increase. Many homeowners in his district will pay more even without an increase in the tax rate because their property assessments have gone up, he said.

"I got the message loud and clear," he said in an interview.

The political consequences weigh on the minds of council members. "All you have to do is raise the property tax and you have the threat of losing an election," said Council Chairwoman Shirley Murphy, a Pasadena Democrat, after the hearing. "Do we need the money? Yes."

Neall said he intended no disrespect of Owens. "I don't think it's second-guessing when you state the obvious," he said. "The point is that $6.8 million, if not used, will be lost forever. That should be part of a family discussion before this budget is adopted, because it has long-term financial ramifications to the county."

He added: "The budget is in the hands of the County Council. They have the ability to do what I asked. The executive had a chance to do that and didn't."

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