Harford's property owners will receive some minor tax relief next year, when a newly enacted credit takes effect.
The Harford County Council lowered the 10 percent cap on the Homestead Tax Credit by 1 percentage point starting July 2008. The council expects to take the cap down to 8 percent by 2011.
With the average property assessment rising at least 40 percent every three years, the Homestead Property Tax Credit caps the amount of property tax an owner-occupant must pay by limiting the annual increase in taxable assessments.
"People want to work here, but they don't know if they can afford to live here," Councilwoman Mary Ann Lisanti said after last week's 6-to-1 vote on the measure.
In jurisdictions within the metropolitan region, similar caps range from 2 percent to 10 percent. In Baltimore and Baltimore County, the cap is 4 percent. In Harford, where the cap has stayed at the maximum allowed for several years, the reduction will temper the impact of rising assessments, which grew as much as 55 percent this year in northern areas of the county.
State lawmakers designed the credit to ease the burden on residents facing spiraling home assessments. In 1990, the state legislature reset a 15 percent cap to 10 percent and allowed local governments to further reduce their limits.
In last week's vote, the council enacted the reduction well ahead of the next budget season to give administrators time to calculate the fiscal impact, estimated at $2.8 million. The council approved a nearly $1 billion budget in May that held the property tax at $1.082 per $100 of assessed value.
Councilman Richard Slutzky, who cast the dissenting vote, said the council contradicts itself by supporting the credit while advocating an increase in the transfer tax, which is collected when properties are sold and change hands. He is particularly concerned about an estimated $1.5 billion state deficit and the growing need for more classrooms in the county. The county should not be giving back revenue when so many schools need renovation or construction, he said.
"We have to make up that revenue or cut back on services," Slutzky said.
The county also is facing major infrastructure costs to accommodate an expansion at Aberdeen Proving Ground that could bring as many as 60,000 residents to the area.
"Harford County will go through a difficult period and we will exhaust every penny available to us," Slutzky said. "Under these conditions, I don't think we could scale back. I find it difficult to support a tax reduction."
Council President Billy Boniface said he would not hold Harford taxpayers responsible for the shortfalls at the state level.
"This has nothing to do with the transfer tax," Boniface said. "We cannot rely on assessments. We cannot rely on property values to grow. We have to diversify our tax base."
Sun reporter Madison Park contributed to this article.