Watch those property tax rates
This calculation, called the "constant yield tax rate," is a popular one for those frustrated that reassessments mean higher tax bills. I've already received two emails this morning pointing out that Baltimore's rate would drop from $2.268 for every $100 in taxable assessed value to $2.079 if city leaders go with the constant yield rate.
All the counties' rates would decrease, too. That's what happens when the assessable base expands.
As the state notes: "If a jurisdiction plans to set a tax rate higher than the constant yield rate, the jurisdiction must advertise the tax increase and hold a public hearing before setting the tax rate for fiscal 2009." (Fiscal 2009 begins July 1.)
If my math is right, the constant yield rate is truly constant -- no adjustment for inflation. Governments always see that as a cut because they say it means less in the way of services. City tax protesters, on the other hand, have argued that the revenue increases from property taxes have been well above inflation in recent years.
Property taxes are bound to be an issue this year as the city considers changing its tax structure. (Click HERE for an earlier post on the city's blue-ribbon tax reform committee.)
Meister, who ran for city council last year, said in an email on the subject: "The 2.079 rate is an 8.33% cut from the current rate of 2.268. We get an 8.33% cut by simply following what the state says. There is no need for changing the homestead tax credit, creating blue ribbon committees, legalizing gambling, or raising income taxes!"
Comments
Great article... You should go into more detail. Certain neighborhoods in the city have been highly inflated. People are being taxed/assessed for way more than they could ever sell their house for on the open market. What's up with that?!
Posted by: Dunn | February 21, 2008 10:31 AM
I say eliminate the assessment process all together and use the sale price as the basis; at least for residential. If Mr Jones didn't think his home was worth $X he wouldn't have paid $X for it.
Most properties turn over pretty regularly (well they used to), so the taxes paid would be adjusted regularly to reflect current market price and based on real transaction data.
The /rate/ multiplier should be locked in for some fixed period (10 years?) and everyone buying a property would know exactly what their obligation will be during the typical life of their ownership.
The relatively few homeowners who stay in their home for 30 years would benefit, but so do their neighborhoods by their stability. The net yield to the county on a given street would be about the same.
Posted by: MrRational | February 21, 2008 11:57 AM
It is odd that the Blue Ribbon committee did
not mention the Constant Yield Tax rate once in its very long report. It is a
simple solution that does not involve raising the
Homestead Tax Credit from 4 percent to 10 percent as
they insanely suggested! If the Mayor wanted to form
a Blue Ribbon committee of business leaders and
experts it should have been one that discussed cutting
costs! Any successful business person knows how to cut
spending. For some reason our city does not even
consider being efficient.
Comptroller Joan Pratt was one of the co-chairs of the Blue Ribbon Committee that never mentioned the constant yield tax rate...
If you want to put pressure on the City Council to do the right thing and approve the 2.079 rate then contact me.
Posted by: Adam Meister | February 21, 2008 1:35 PM