County Council members are toying with the idea of changing the way they describe the property tax rate, for the sake of clarity and honesty in government. That is a good thing.
Later this month, the county will set its legislative priorities for the next General Assembly starting in January. At a recent meeting, Councilman Jerry Donald (D) initiated a discussion about the constant yield tax rate, a frequent point of contention during the annual county budget process.
As we have written before, any discussion of the county property tax rate usually causes people’s eyes to glaze over, and if the talk turns to the constant yield tax rate, the fog is even worse. But it is important.
Simply put, the state — by law — must tell each county government what property tax rate would yield the same tax dollars as the county received in the prior year. Anti-tax politicians pushed for the law to restrict growing counties from reaping too much revenue.
If the county were to adopt it, the tax rate would need to be cut to eliminate the increase in value of property owners’ homes, and to eliminate the benefits of the growth the county has experienced from new homes being built.
Complicating any discussion — and a sure cause of confusion for any resident who wanders into the room — is the conflicting concept of the constant tax rate. That means keeping the same rate that was charged in the previous year, and that allows county revenue to grow based on new residential construction and re-evaluation of existing properties.
Frederick County’s overall property tax rate currently stands at $1.06 per $100 of assessed value. If the county keeps the rate steady, more money would be collected, and county revenues will increase. Our tax rate has been kept the same for several years, and revenues have increased each year.
Frederick County is an attractive place to live and do business, so home prices are rising, and the population is growing. All those new homes, stores, offices and factories being built around the county mean more tax revenue. They also come with more demands on local governments. The additional tax revenue allows the county to keep up with the cost of services expected by those new residents and new businesses.
This is not runaway government spending. It is a prudent budget for a growing community.
The idea of permitting construction of new homes and businesses while restraining the growth of tax revenue makes a mockery of the arguments made in favor of growth. It may make a good talking point for anti-tax voters, but it is intellectually dishonest.
If Frederick County is to remain a vibrant, attractive and growing community, the county government must have the money to spend to maintain the quality of life we enjoy. The stable tax rate provides critical revenue to make that happen.
Changing the way county officials discuss the tax rate would be to the advantage of residents who want plain explanations of county decisions.
The state should drop the whole artificial construct of a “constant yield” rate, and instead report how much additional revenue can be expected from the current tax rate. Then, elected officials could discuss how much money is needed to provide the government services expected by residents — from schools to social services.
In growing counties like ours, the rate will often stay the same and yield more revenue. In jurisdictions without growth, the local government might need to raise rates or reduce services. But the discussion should take place in the open without complicating it with obscure obfuscation — like constant yield.