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As Long as We Remember...

October 5, 2004

Get Ready! Get Set! Go Pay!

Alan Imhoff

This coming January the Maryland State Department of Assessments and Taxation will grace approximately one third of our homes with their new assessments. This third includes the City of Frederick and surrounding areas.

Based on some unscientific guesswork, my prediction is that these properties will experience a significant percentage rise close to or at the maximum limit allowed by law. That percentage will in all likelihood fall between 23 and 28 percent.

So, for the average (if there is such a thing any more) home assessed at $250,000 today, that homeowner could expect their assessment to go up by another $57,500 to $70,000.

Not bad when going to the bank for a loan or listing your assets, but quite another thing when it comes time to pay property taxes.

So, what will this mean?

First off, the State eases the pain by spreading the assessment increase over three years and hopefully all the tax rates that are based on these assessments will remain constant. Yeah! Right!

So, for arguments sake we'll say each year will receive a $21,000 boost. When we divide that number by 100, all the jurisdictions do that to save space in computer files - not really, just part of the process though - the $21,000 now becomes $210 for tax rate purposes.

No big deal you say? Well, let's have a real look. First is the State property tax, currently at 13.2 cents per hundred. So we get hit for $27.72 for them. Then comes the Frederick County real property tax at $1 per hundred. This one is easy, $210. So, now we up to a $237.72 increase.

Next comes the City of Frederick property tax at 69 cents per hundred or $144.90. This brings the additional tax to $382.62.

Finally, we residents of Frederick City live in an Urban Fire/Rescue District, which has a rate higher than the State rate at 13.5 cents per hundred, or just $28.35.

So, our grand total for having our house sit when it has always been will now generate $410.97 in additional revenue for our governments to spend wisely.

That's just the first year. For ease of math, the second year of phase-in is another $21,000, so we add another $410.97. So in year two we need to pay out an additional $821.94.

By year three, you guessed it; the total is now $1,232.91. Is it any wonder that government wants to restrict housing during high demand? They know they can get "oodles" of dollars from us without having to change a thing.

Remember now, these are new dollars on top of what we already pay. For that $250,000 average house we pay the State $330; Frederick County $2,500; the City of Frederick $1,725; and Urban Fire/Rescue $337.50. When government is almost guaranteed a 25.2% increase over three years is it any wonder why they are so generous with our money, especially when the "Cost of Living Adjustment" only goes up about 12% during the same time frame.

Yet, somehow all we ever seem to hear is how they cannot make ends meet.

Do not forget, this is only for those of us who already live here, which in theory means we have already influenced the expense budget by our demands. So what do we get for that extra 10 to 13% above the cost of living?

Haven't you ever questioned why it is that when government was trying to control growth of new housing, assessments went up and so did tax rates to keep up with demand? Yet now that we have controlled new housing growth - perhaps too aggressively - our assessments go up even faster and higher and so did some tax rates. Beats me!

Maybe the tax game could be paraphrased similar to the popular song 30 years ago, "Where have all the flowers gone?" Now maybe it should be "Where do all the taxes go?"

Well, back to "get ready, get set, go pay." With one third of the county's houses up for this assessment, at roughly 24,000 houses times the average $410.97, government will receive $9,863,280 more next year in new tax revenue, just by having the houses sit there. The county gets the lions share at just over $5,000,000; the city just under $3,500,000.

Now just a reminder, that's for year one, by year three the county is raking in $15,000,000 and the city $10,500,000. Yet next year another third of the county starts its cycle; the following year the final third; then three years from now it is our turn again.

Is it any wonder why I get dizzy?

Perhaps Frederick County is losing its milk cows to the cash cows - homeowners.

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