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Nice to cap your own tax rate


The Howard County Council agenda is pretty full this month, with lots of fiscal legislation. It is annual budget season, so the Council is very busy, even with the shutdown. There are several tax increases proposed and it is now ALSO the annual time to set the fee/tax schedule for many development fees and taxes.

Legislation that raises taxes individuals pay, includes a transfer tax increase (on real estate transfers), CR84, and a real estate transaction recordation tax increase, CR85. Many have expressed concern about these being large increases.

Don’t lose sight of two other important rates being set soon. Note the building excise tax (paid by builders on residential units), CR 80,and rate of fee paid in lieu of providing moderate income housing units (mihu), CR83. Both of these rates are legally capped, by local, not state code. The cap is based on the Engineering News Record (ENR) Construction Cost Index (hoco uses the Baltimore Region index). Each year, I go and look up those increase maximums to see how much of that allowed increase is being proposed by the County Executive to the County Council. This year I had a much harder time finding those figures.

What is ENR? It is a magazine that provides construction industry news, data and commentary to industry professionals. They put out annual cost information for the building and construction industry. A few weeks ago, I started googling to find this rate, and had a hard time. I ended up paying $108 for an annual membership to be allowed to see this information from ENR. I am told there are work arounds (google cache, old links may work), but clearly, since this data sets public taxing policy, it should be readily available, and/or included with the legislation information.

So here you go, for free:

Since these figures are not included in current legislation, I am not sure which rate is being used. As you can see, they vary greatly in the late 2019 to early 2020 time period. Seems the proposed increases in these rates of a PENNY, for Howard County this year, seem lower than the amount of the cap on how much they can be increased, depending on which rate from the chart is being used. Again, we do not not know how these are being applied. The larger issue is these rates as an index, are a cap used for this industry using their costs.

So, I started looking for verification that these two tax/fee rates are the only ones locally capped. I cannot find others in the code. A search for caps brings up these two readily. In the past, when they were rarely higher, we did not raise to the cap.

Other counties mention ENR in their impact fee type decisions in local laws. Prince George’s County notes the price index ENR increase be EQUAL to the increase in impact fee type charges. In Montgomery County they simply have to “use” the cost index to set rates. In Frederick County they have to “take into account” the ENR rates. Several other jurisdictions do not have notation of ENR in searching local laws. Why does Howard County say the rate is the MAXIMUM increase allowed? Seems to be taking the ability to make objective, fair market planning and fiscal decisions from the Council.

Many, rightly, take great stock in having economic market factors create affordability influence on industry costs, but do we see this in other sectors? Do we see this for individuals?

Are taxes decreasing at this difficult economic time, where almost all of us can afford them less? Of course not, after all, governmental budgets are hurting and need to fund providing services, but how are we prioritizing the revenue source ideas? We are seeing the need for funds reach into individual’s pockets quite readily, but the developer pocket share of these current increases is sewn shut.

This legal restriction disallows all business sectors and individuals to be treated fairly in this economic environment. We need an even playing field and more appropriate, objective ability to create taxes and fees that are in line with real current economic indicators. These rates directly affect road improvement budgets and affordable housing funding.

In summary, it must be nice for an industry to be allowed to cap its own tax and fee rates, and cap the increase so low, and yet we do not even set it to that low max. Howard County should amend this cap requirement, and there should be a state mandate to use a more objective cap on these increases such as a broader consumer price index, if we are going to cap them.

Additionally, many other county fees are up for review this month. It’s bad enough that so many permitting and other DPZ charges, have not been increased for twenty years, much less for inflation, but last year, when I brought this issue up, the County's legal advice was that the Council cannot increase these fees without providing some rationale for the cost of providing the service of giving a permit for instance, as having increased proportionately, even though no increase had occurred for decades!

We do not see that rationale used when proposing a hike in any other taxes or fees do we? Council Members promised a year ago to look into this and get these rates increased. They are now back on the table this month. I hope they finish that promised review now, while proposing individual tax increases.

Some say the fees I have mentioned herein, don’t bring in much revenue. I doubt that. What I don’t doubt is that the tiny to no increase in all of these fees will surely bring in very little.

Time to ease restrictions on the Council’s rights to assess rational increases in revenue production for the budget, fairly applied to all. We are in this together right?


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