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No shifting of tax burden from developers to Baltimore County residents, not even temporarily during the pandemic | COMMENTARY

A construction worker wears a mask while working on the Towson Row site last week in the Baltimore County seat of government. On July 1, developers of such projects face impact fees that at least one county council member would like to delay.
A construction worker wears a mask while working on the Towson Row site last week in the Baltimore County seat of government. On July 1, developers of such projects face impact fees that at least one county council member would like to delay. (Jerry Jackson/Baltimore Sun)

The proposal by Baltimore County Councilman Julian Jones to delay impact fees soon to be assessed on developers is surely well intentioned. The construction industry has been hit hard by the economic slowdown wrought by the COVID-19 pandemic and the stay-at-home orders that have come in response. Not just because projects have been delayed or interrupted but because the future is uncertain. If the economy does not rebound, what is the need for new office or retail space or residences or industrial parks and the like? Getting the nation’s 7.28 million or more construction laborers and tradespeople back at work as soon as possible would seem to be in the interest of the nation, state and the county.

But there’s a problem with that, and here’s why Councilman Jones is wrong: If developers get a three-month tax holiday as proposed, who pays instead? The answer is that Baltimore County either cuts services or places a greater share of the burden on county residents. Cutting services for a few months would, perhaps under different circumstances, seem reasonable. But as we’ve noted before, state and local governments are watching tax revenues drop off a cliff. In Baltimore County, it’s already translated into a $270 million decline in anticipated receipts just between now and July 1. And it’s going to get worse. Cuts in county spending are coming one way or another. Why make that problem worse?

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Yet it’s the cost-shifting inherent in the councilman’s plan that makes the plan most problematic. Bills still have to be paid. County government doesn’t have the luxury of borrowing its way out of a fiscal crisis as the federal government does. That means giving this break to developers shifts costs to other taxpayers. And who are they exactly? The biggest sources of revenue for county governments are property taxes (32%) and individual income taxes (21%). So that handout to developers is mostly coming out of the pockets of county residents.

Perhaps that’s a harsh way of putting it, but there’s something else to remember. For years, county taxpayers have essentially been called on to underwrite the hidden costs of development. New roads or libraries, new schools and teacher salaries that come with them, those are the “impacts” that an “impact fee” is meant to cover. In other counties, impact fees have become commonplace. Until the County Council passed Baltimore County’s impact fee last year, it was the only subdivision in all of Central Maryland without one. In other words, this particular bill was badly overdue.

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Obviously, the timing stinks. In a perfect world, developers would have been paying these fees years ago and it would already be built into their costs (and perhaps into higher housing values for everyone). But, alas, they are reaping what they sowed. In case anyone failed to notice, a lot of Baltimore County residents are frustrated with the current conditions of some Baltimore County schools. They’d like some replaced and some just to have safe and functioning water fountains and air conditioning. A county that had been assessing impact fees for years would be less likely to have these problems. But developers opposed those fees and so it goes.

We are mindful of those job losses, of course. Just as the retail industry is suffering and restaurants are shuttered, just as hotels and tourism are ailing and even “essential” industries are feeling the pinch, there is plenty of trouble to go around. But this particular bill (initially estimated at $5.7 million in the first fiscal year but likely to end up lower) has been on the table since last June. Developers have already had the benefit of a one-year delay in implementation. No more taxpayer subsidies. Sorry, the free ride is over.

One final point. Baltimore County’s impact fees carry numerous exemptions such as enterprise zones and redevelopment areas to lower the cost of affordable housing and help neighborhoods that need new construction but may not be customarily targeted for it. That’s appropriate and should continue. Charging all other developers of new homes 1.5% of the gross sale price and commercial developments on a sliding scale from 80 cents per square foot for industrial projects to $1.50 per square foot for multi-family rental projects was reasonable in 2019 and is just as reasonable today. Somebody has to pay for the schools and roads these developments require. It ought to come first from those who profit by them.

The Baltimore Sun editorial board — made up of Opinion Editor Tricia Bishop, Deputy Editor Andrea K. McDaniels and writer Peter Jensen — offers opinions and analysis on news and issues relevant to readers. It is separate from the newsroom.

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