CHANGE MY LOCATION
Property, taxes generate highest revenue
SEE HOW THIS STORY DEVELOPED
Related Topics: BALTIMORE
)
The houses in the Cider Mill development off Landing Road in Elkridge are selling for a minimum of $600,000. This property tax revenue will contribute to the second-largest source of income for the county. – Examiner file photo
BALTIMORE (Map, News) - As many businesses brace for the economic downturn, Howard’s entrepreneurs are equipped to survive the slowdown, officials said.
Strategically positioned close to Washington, and Fort Meade, many Howard businesses rely on federal procurement for their bread and butter, which provides a steady stream of work and a stabilizing force.
“The bottom line is Howard County still will be better off than anyone else because of our structure and the economic engines that drive the county,” said Dick Story, executive director of the Howard County Economic Development Authority, referring to the county’s finance, insurance, real estate and defense subcontracting markets.
Revenues on the rise
Howard maintains a 3 percent unemployment rate, and continues to see one of its largest revenue sources escalate: income taxes.
The county’s income tax rate at 3.2 percent has remained unchanged since 2004. Maryland’s state income tax is 4.75 percent.
From 2000 to mid-2006, Howard’s population has grown nearly 10 percent to 272,452, according to the U.S. Census Bureau.
Meanwhile, the median household income has been steadily growing. In 2006, the median household income was $94,260, about $20,000 higher than in 2000, according to the U.S. Census Bureau.
Revenue from property taxes also keeps increasing because of steadily rising property assessments, according to county budget projections.
The households and jobs expected to come to Howard from the federal Base Realignment and Closure process at Fort Meade will also contribute to both revenue streams, officials said.
Developers have been building office space on speculation, which means they construct them without having commitments from tenants, in anticipation that the need for subcontractor office space will skyrocket as the businesses arrive.
“The spec space under construction may be vacant but the answer to prayer is BRAC,” Story said.
These revenue sources are expected to help balance out the declines in real estate-related revenues.
Unpredictable
income tax revenue
But Howard, the third-wealthiest county in the nation, isn’t immune to revenue volatility, and income tax can be unpredictable.
The most unpredictable part is capital gain, which is the profit from a sale of an asset, such as real estate.
This one-time income boost is taxed, and it’s difficult for county officials to know how much county residents earn in capital gains and how much revenue the county will generate.
“That’s where people are taking profits and losses, and that’s usually a major portion of Howard County income tax stream,” Story said.
To make income tax predictions even more difficult, in fiscal 2009, the county will be collecting income taxes from 2007, 2008 and 2009, Howard Budget Director Ray Wacks said.
This delay comes from some people taking up to six months after the April 15 deadline to pay taxes, and the state taking time to get the money to the counties.
Although not uncommon each year, it’s another layer of unpredictability.
Steady property tax revenue
More predictable and steadily rising are property taxes.
Property is reassessed every three years, and as property values have increased, so has the county’s revenue from property taxes.
“Over the past four years, the assessments have just gone through the roof,” said Wacks.
Howard residents receive some relief through a 5 percent cap on the increase in property taxes that has been in effect since the early 1990s, Wacks said.
Although the tax bill is still higher than the previous year, it doesn’t mirror the assessed value, which in some cases has doubled in the last few years.
Counties can set the maximum tax cap up to 10 percent, and Howard officials haven’t talked of raising the cap, which helps the county better predict that revenue, Wacks said.
smichael@baltimoreexaminer.com
Comments from Examiner Readers
11:53 AM MST on Thu., Mar. 27, 2008 re: "Property, taxes generate highest revenue"
Report as inappropriate
Examiner Reader said:
LOL. As many HC homeowners find their homes worth substantially less in a rapidly declining housing market, Howard County’s property tax assessors issue 27-34% property tax increases. Every home owner in HC needs to protest this government fiat tax insanity and fight their assessment all the way to court. A class action suit is needed.
1 agree | 1 disagree
Vote on this comment: I agree or I disagree