EASTON — The property tax “cap” that attracts wealthy landowners to Talbot County, and has in many ways shaped the county's current economy, will be the subject of a ballot question in November if the Talbot County Council has its way.
The council has introduced legislation that keeps the cap in place but raises the bar, so to speak, so the county may garner more funds it desperately needs, according to county officials.
Resolution 230 is an amendment to delete a part of Section 614 of the Talbot County Charter that talks about property taxes and the Consumer Price Index, Urban (CPI-U).
At Tuesday's legislative session, Talbot County Attorney Michael Pullen read that section of the charter as it appears now.
“Notwithstanding any other provisions of this article, from and after July 1, 1997, revenues derived from taxes on properties existing on the Talbot County real tax rolls at the commencement of the County fiscal year shall not increase, compared to the previous year, by more than two percent or by the Consumer Price Index for all urban consumers (CPI-U) percentage of change for the latest calendar year, determined by the U. S. Department of Labor, whichever is the lesser,” Pullen quoted directly from the Charter.
The proposed amendment would delete the last clause of the last sentence, according to Pullen. That section would read:
“Notwithstanding any other provisions of this section,” Pullen said, “From and after July 1st, 2017, revenues derived from taxes on properties existing on the County real property tax law commencing in the County fiscal year shall not increase, compared to the previous year, by more than 2 percent, period.”
That means effectively getting rid of the influence of the CPI-U. It would no longer be a factor in considering Talbot's property tax rate, and at the discretion of the county, taxes could not be raised more than two percent.
For Fiscal 2017, which began July 1, the county raised property taxes 0.7 percent, the CPI-U according to the U.S. Department of Labor.
That proposed increase is expected to generate $242,000 more income in a budget that totals roughly $79.2 million, according to Finance Officer Angela Lane. It equals a quarter of a penny per $100 of assessment, Lane said in May.
If the proposed changes to Section 614 had already been passed by the voters and the full 2 percent had been implemented, there would have been $691,300 in additional tax revenue, according to Lane, a difference of $449,300.
“It's not a significant increase,” Lane said in her office Wednesday afternoon. “The impact is really minor.”
Council member Dirck Bartlett indicated that, if the changes were passed, the public's common perception of Talbot's two percent tax cap ceiling would still be in place.
“I think it's general knowledge in the community that we have a 2 percent tax cap and on property tax the cap will not go over 2 percent,” he said.
“And so I think it's fair to say, if we were to eliminate the CPI-U, we haven't really destroyed the tax cap, we simply allow it to go up to 2 percent a year instead of going up 0.7 percent a year,” he said.
The history of tax rate increases year after year in Talbot show steady decreases for the last five years.
The 2 percent tax cap ceiling has not kicked in since 2013, according to Lane.
For Fiscal 2013, she said, the CPI-U was 3 percent, but Talbot's tax cap stopped that at 2 percent.
The next year, Fiscal 2014, the increase was 1.7 percent, followed by Fiscal 2015 with 1.5 percent, then Fiscal 2016 with 0.8 percent. The county is currently in Fiscal 2017 with 0.7 percent.
Meanwhile, county council members are wringing their hands. The budget negotiations for Fiscal 2017 were particularly difficult.
A dramatic and unexplained drop in income tax revenues led the county to transfer $2 million from a contingency fund to balance the 2016 budget and they see more trouble ahead, officials said at Tuesday's legislative meeting.
“I think the thing that the county has been faced with through this budgetary process is the strength to take care of the budgetary needs of the county,” Council President Corey Pack said.
He said he is particularly worried about the county's ability to fund emergency services and law enforcement.
“When it comes to emergency services we just don't have the resources,” Pack said. “I've been saying that publicly. I will say that for the next two years.”
“If we don't have the ability to generate more revenue through its citizens, then this council and perhaps even future councils will have to make some drastic cuts on emergency services,” Pack said.
The council members expressed regret at not being able to arrive at a different solution.
“We are in a hole,” Council member Laura Price said. “This is only a very small baby step to be able to retain any growth in the county.”
She said the CPI-U's percentage of 0.7 and 0.8 in the last few years was “an incredibly small number.”
“This comment coming from probably the most tax-conservative member of the Council,” she said.
“We have, the five of us, been going back and forth and back and forth, what do we do?” Pack said.
“We had discussions with Ms. Lane, our Finance Director and we had discussions with Mr. Hollis and his staff to try to find a way to do this and not come to this point,” he said.
Resolution 230 deals with real property taxes, but to be clear, another charge is allowed to be tacked on to property taxes to generate funds for the county's school system that is mandated by the state and referred to as the “education supplement.”
For Fiscal 2016-17 that amount is $.0086 per $100 of assessment, and is expected to generate roughly $612,400 above and beyond regular property tax revenues.
When property owners look at their tax bills, they can see their assessment, the tax rate they are being charged and the rate of the education supplement all spelled out, according to Lane.
Because Resolution 230 involves changes to the county charter, it must be put to a vote by the citizens as a ballot question.
The deadline for a county to certify ballot questions for the upcoming election is Aug. 15, 2016.
That gives the Council less than a month to decide whether or not to have the matter placed before the voters as a referendum in the November 2016 Presidential Election.
A public work session and two public hearings have been planned.
The work session will be held at 5 p.m. Tuesday, July 19, in the council chambers in the south wing of the Talbot County Courthouse.
Members of the Talbot County Taxpayers Association have been invited to participate.
There will be a public hearing at 6:15 p.m. Tuesday, July 26, and a second public hearing at 2 p.m.Tuesday, Aug. 9. Both public hearings will be in the council chambers.
In order to place the question on the ballot for voters, the council must pass Resolution 230 at the Aug. 9 meeting.
The Talbot County Charter can be viewed and downloaded at http://www.talbotcountymd.gov/uploads/File/charter/Charter.pdf.
Resolution 230 can be viewed at http://www.talbotcountymd.gov. Click on the link for Pending Legislation.