| Montgomery County Taxpayers League |
| Taxation |
Let's take a look at the taxes you will be paying to support the FY 2007 budget. Last December the County Council
tentatively approved the Spending Affordability Guidelines (SAG) for FY 2007. The final approval will occur when they
formally approve the budget in late May.
Property Taxes Property Taxes were initially anticipated to increase 15.3% ($169.1 million) if the tax rate
remained the same as in FY 2006. Montgomery County fortunately is limited by the state mandated 10% maximum
assessment cap in computing property taxes and the County has habitually exercised that limit. Other comparable
jurisdictions, Howard, Baltimore County and City, Prince George and Anne Arundel have assessment caps of 5%,
4%, 3% and 2% respectively.
tentatively approved the Spending Affordability Guidelines (SAG) for FY 2007. The final approval will occur when they
formally approve the budget in late May.
Property Taxes Property Taxes were initially anticipated to increase 15.3% ($169.1 million) if the tax rate
remained the same as in FY 2006. Montgomery County fortunately is limited by the state mandated 10% maximum
assessment cap in computing property taxes and the County has habitually exercised that limit. Other comparable
jurisdictions, Howard, Baltimore County and City, Prince George and Anne Arundel have assessment caps of 5%,
4%, 3% and 2% respectively.
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When the Taxpayers League presented a petition with over 1800 signatures to the Council in late September to
reduce the cap for levy year 2007 to 5% it was totally ignored. A public hearing as allowed in law was never held and
the Council took no action resulting in retaining the 10% cap by default with no record of their inaction. Public
sentiment resulting from the outrageous property assessments forced the Council to recommend a 9.18 cent,
$114.2 Million tax reduction for FY 2007. I guess we should be thankful for the one year reduction but we are still
vulnerable to the tax cap of 10% that could result in future large increases as it did in the years prior to the current
year.
Revenue Estimation How well does the county estimate revenue? There is a consistent underestimation
of revenues. The independent audits for FY 2004 and 2005 revealed in "unanticipated revenue" of $99 million and
$139.5 million respectively. Early revenue estimates for FY 2006 indicate it will exceed the approved budget
estimates by $90 million. That's over $325 million of your tax dollars over three years. Where did it go? Not back to
the tax payer. Should the public be informed as to how it was used?
Also realize your other tax increases since FY 2003.
Impact Taxes Unnecessary burden is placed on the taxpayers while the developers are getting a break.
Impact taxes are supposed to support the upfront costs of necessary county infrastructure required as a result of
the increased population. The projected impact taxes paid by developers for FY 2004 and 2005 was estimated to be
$66.6 million. Actual revenue collected from the developers was $21.8 million, a short fall of $44.7 million. This dollar
amount could pay for two elementary schools and four gyms or pay for over 90% of the six year capital costs for the
Clarksburg and Germantown fire stations as well as the 6th District police station.
reduce the cap for levy year 2007 to 5% it was totally ignored. A public hearing as allowed in law was never held and
the Council took no action resulting in retaining the 10% cap by default with no record of their inaction. Public
sentiment resulting from the outrageous property assessments forced the Council to recommend a 9.18 cent,
$114.2 Million tax reduction for FY 2007. I guess we should be thankful for the one year reduction but we are still
vulnerable to the tax cap of 10% that could result in future large increases as it did in the years prior to the current
year.
Revenue Estimation How well does the county estimate revenue? There is a consistent underestimation
of revenues. The independent audits for FY 2004 and 2005 revealed in "unanticipated revenue" of $99 million and
$139.5 million respectively. Early revenue estimates for FY 2006 indicate it will exceed the approved budget
estimates by $90 million. That's over $325 million of your tax dollars over three years. Where did it go? Not back to
the tax payer. Should the public be informed as to how it was used?
Also realize your other tax increases since FY 2003.
- Utility Taxes up 382.0%, $93.2 million
- Telephone taxes up 263.8%, 21.1 million
- Transfer & recordation taxes up 42.41%, 55.1 million
- Income taxes up 14.7%, 121.4 million
Impact Taxes Unnecessary burden is placed on the taxpayers while the developers are getting a break.
Impact taxes are supposed to support the upfront costs of necessary county infrastructure required as a result of
the increased population. The projected impact taxes paid by developers for FY 2004 and 2005 was estimated to be
$66.6 million. Actual revenue collected from the developers was $21.8 million, a short fall of $44.7 million. This dollar
amount could pay for two elementary schools and four gyms or pay for over 90% of the six year capital costs for the
Clarksburg and Germantown fire stations as well as the 6th District police station.
The property taxes that we pay on our houses and land or townhouses or condominiums in
Montgomery County will double in about seven years if nothing changes. One-third of the county
has just received their new assessment and on average it has gone up by about 70 percent over the value three
years ago. If the tax rate stays the same, the money you pay for property taxes will increase ten percent per year,
indefinitely and ten percent annual increases, compounded, cause a doubling in seven years. So if you now pay
$5,000 per year (or $417 per month) in property taxes, be prepared to pay $10,000 per year (or $833 per month)
in 2012. Recently the County Executive announced a 2 cent property tax rate decrease. It is estimated that a house
reassessed at $400,000 will still have a property tax increase of about $312.
There is a requirement in the Montgomery County Charter that the revenues from property taxes can only increase
by the cost of living, plus the revenues produced by new construction and certain other zoning or category
changes. The council have overridden this requirement in each of the previous three years.
Our property taxes would actually go up faster, were it not for another state requirement, which limits the increase
in assessments used for tax purposes to ten percent. Many counties set this limit on assessment increases to much
smaller amounts, but the current Montgomery County council has elected to use the maximum limit allowed by the
state, and so the tax revenues will go up 10 percent per year, if the tax rate stays the same.
The taxpayers of the county had an opportunity, this past November, to limit the property tax increases to that
which is required by the Montgomery County Charter by approving Question A on the ballot, but Question A was
voted down by about a 41/59 vote.
Montgomery County will double in about seven years if nothing changes. One-third of the county
has just received their new assessment and on average it has gone up by about 70 percent over the value three
years ago. If the tax rate stays the same, the money you pay for property taxes will increase ten percent per year,
indefinitely and ten percent annual increases, compounded, cause a doubling in seven years. So if you now pay
$5,000 per year (or $417 per month) in property taxes, be prepared to pay $10,000 per year (or $833 per month)
in 2012. Recently the County Executive announced a 2 cent property tax rate decrease. It is estimated that a house
reassessed at $400,000 will still have a property tax increase of about $312.
There is a requirement in the Montgomery County Charter that the revenues from property taxes can only increase
by the cost of living, plus the revenues produced by new construction and certain other zoning or category
changes. The council have overridden this requirement in each of the previous three years.
Our property taxes would actually go up faster, were it not for another state requirement, which limits the increase
in assessments used for tax purposes to ten percent. Many counties set this limit on assessment increases to much
smaller amounts, but the current Montgomery County council has elected to use the maximum limit allowed by the
state, and so the tax revenues will go up 10 percent per year, if the tax rate stays the same.
The taxpayers of the county had an opportunity, this past November, to limit the property tax increases to that
which is required by the Montgomery County Charter by approving Question A on the ballot, but Question A was
voted down by about a 41/59 vote.
| Property Owner Beware Maryland law provides that the tax on your personal home can not increase more than 10% per year. It's now your responsibility to check that is the case and apply for a tax credit if the law is not met. See story. TAX LAW ADHERENCE YOUR RESPONSIBILITY |