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The Tentacle


November 10, 2005

Again With Their Hand in Your Wallet

John W. Ashbury

It belongs to you. You earned it and you spent it so you could continue to live in Frederick County. So why is it so difficult for our county commissioners to realize they have overcharged us in recent years? And should give us our money back?

In the spring of this year we learned that the county had a windfall of more than $26 million. That's $26 million more than the commissioners had expected to be able to spend. Two commissioners wanted to give at least some of it back to homeowners by reducing the property tax rate to the constant yield of $.92 cents per hundred dollars of assessed value.

But that third vote wasn't there. So the five of them spent every penny of that $26 million plus. They did condescend to provide some tax relief by crediting each owner-occupied residential property with a deduction of $100. When you're paying $3,000 in property taxes, $100 doesn't help much.

So, a couple of weeks ago the financial gurus in Winchester Hall told the commissioners that there would be a $41 million surplus to spend in the 2006-2007 Fiscal Year Budget, which takes effect next July.

And where do you suppose it came from?

It came from your pocket in the form of over-taxation. Well, maybe some of it came from the prudent spending practices within some county departments. But not much!

Right off the bat we know that some of that money will be used to offset expected pension expenses. The federal government is making changes in accounting requirements, forcing governments across the country to pay for those benefits when they are incurred rather than when they are due to be paid. At the state level that little accounting change could cost the state more than $1 billion in its next budget.

By making these pension contributions now, the governments will be able to maintain their bond ratings. Frederick County enjoys a pretty good rate which results in lower interest charges on the bonds it sells for capital improvements.

Well, these county commissioners have now decided that they will return about $15.12 million of that $41 million surplus to county taxpayers; but the hang-up is just how to do that. Some want to reduce the property tax rate which will benefit all property owners. Others want to again provide a property tax credit to owner-occupied residential property. The latter would provide a higher benefit to strapped citizens on fixed incomes, particularly seniors, some of whom have been forced out of their homes and even out of the county.

To their credit the commissioners did vote this summer to reduce the homestead property tax credit from an increase of 10 percent above your current assessment, to just 5 percent. Thus if you, living in an owner-occupied dwelling, have a house assessed at $250,000 this year, and the assessment increases to a value of $300,000 (as decided by the State Department of Assessments and Taxation) next year, the assessment on your house for tax purposes will increase only up to $262,500, instead of to $275,000.

What this means to your wallet is significant. Whereas you paid $2,500 to the county this year, you will pay $2,625 next year and not $2,750, a savings of $125. That might not sound like much, but it will pay for a three-month supply of a cholesterol reducing drug like Lipitor.

Of course this assumes that the property tax rate remains at $1 per hundred of assessed value.

The commissioners are struggling right now with where to set the budget MARC (Maximum Agency Request Ceiling) for next year. This sets the limit on budget increases for each department. It could be set at zero, or the sky's the limit. In actuality it means little. The commissioners can budget any amount they want as long as the money holds out.

But already the Board of Education is clamoring for at last $17 million more next year; this despite the fact that there are less than 200 more students this year than last although estimates were that we would have more than 500 additional students.

Another factor raising its ugly head in this mix is the cost of construction of new schools and renovations. The county wants to begin building the new Oakdale High School in mid summer. It is a two-year project and is more than just needed now.

But the devastating hurricanes of this summer will have an enormous impact on the availability of building materials. A single sheet of plywood is expected to more than double and may go as high as $50 for a 4x8 sheet.

Hundreds of thousands of homes across the Gull Coast will be bulldozed. In New Orleans alone the estimates are that 165,000 houses will have to be destroyed and rebuilt. It will take years.

But we need that new high school, estimated to cost around $60 million before the hurricanes. Officials are being quiet about the estimates now, and with good reason. From concrete to nails, everything needed to build anything will be more expensive, far above inflation.

It is possible the commissioners will have to use some of that $41 million surplus to fund school projects on a pay-as-you-go basis rather than bonding for it because of the increased costs.

Despite all these factors, the commissioners have to understand that county taxpayers are getting fed-up. Perhaps they already understood that to some extent last year when they provided that small tax credit.

But next year is an election year. And while it is known that two of the five are planning to seek re-election, it is possible that four of the five will put their names before the public again.

If that happens, only John L. "Lennie" Thompson can crow about his fiscal responsibility. With Bruce Reeder likely to retire from public service in 2006, the other three will be hard pressed to sell citizens on the idea that they haven't been spend-thrifts.



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