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Fiscal Facts

Article submitted for the November issue of Calvert Life Monthly Magazine:

I am amazed by the misinformation and misunderstanding regarding taxes and budgeting. Constituents continue to tell me that their taxes have doubled this fiscal year. That is impossible on a primary, owner-occupied residence! By Maryland law, no matter how much your assessment went up, the most your taxes on your primary residence can increase is 10% per year.

Will there be a 10% increase every year? Absolutely not!

Many assessments stayed the same or decreased. Because the assessment reflects the actual value of your home, fluctuating home prices may cause the assessment to decrease or to increase, depending on the local housing market.

The maximum increase is 10%. There could be no increase, or any increment up to 10%.

I have previously written about the effect of Other Post Employment Benefit (OPEB) accounting rules on our county budget. I have been asked: why didn’t the Board of County Commissioners (BOCC) plan for this? It is a new accounting rule that caught all jurisdictions off-guard. I first learned of it in August of 2005. We recently received the actuarial amounts of liability for the Board of Education (BOE) employees, which is $10 million more per year. We already learned that the OPEB amount for county employees would be an additional $2.2 million per year, and had budgeted for that increase.

Is this need for $12.2 million more each year the reason for the failure to give a property tax break at this time? Yes, it is.

What about next fiscal year? I do not anticipate a property tax rate increase if the BOCC continues to operate in a fiscally conservative and sound manner.

As we control residential growth, and the number of new housing permits issued is less, income from excise taxes on new homes is less. Can the excise tax amount be raised to compensate? No. The excise tax is based on the actual, real capital costs of a new home based on costs in 2003. Any future increases have to be tied to actual additional costs.

Continuity of fiscal conservatism is essential!