Washington County Economy Improves “Little By Little”

September 4, 2014

As reported by the Hagerstown Herald-Mail, the Washington County economy is growing “little by little.”

From January through June, spending here totaled $813 million, a 1.6 percent increase over the $800 million spent in the first half of 2013 on purchases on which consumers paid Maryland sales tax, according to The Herald-Mail’s study of sales tax collections in the county.

To measure the economic progress of the area, the Hagerstown Herald-Mail has been tracking state sales taxes collected by local businesses.

In Washington County, spending on taxable purchases in 2007 alone topped $1.74 billion.

The following year, as Americans realized the riskiness of their new adjustable rate mortgages, the sales and prices of homes across the nation dropped sharply. Along Main Streets nationwide, business shrunk, unemployment climbed and wallets thinned.

In this county alone, spending on taxable items during 2008 fell to $1.65 billion — $90 million less than was spent here in 2007, the newspaper’s estimates show.

Sales continued to decline until 2010 and then slowly began to inch up.

By 2013, purchases had risen to $1.66 billion.

That mark is worth noting because it is $700 million more than what was spent here in 2008.

However, the article indicates that some businesses are still affected by the uncertain economy, while others are recovering much more strongly.  The article provides an overview of how many business sectors are performing in the area.


Assessing Real Property For Taxation Purposes

September 4, 2014

The State Department of Assessments and Taxation (SDAT) has appointed a workgroup composed of state and local representatives to examine the property assessment process in Maryland.  Two areas of focus include whether the physical inspection of property is necessary to assess property and whether changes in property status and new properties are being picked up timely and added to the tax rolls. To assist with making recommendations in these areas, the workgroup was briefed on the property assessment process at the previous meeting.

SDAT is responsible for the assessment of real and personal property for taxation purposes. This blog post will focus on the process for real property assessments.  The personal property assessment process will be discussed in a future post.

Process Overview

In Maryland, real property, land and improvements to land, is assessed on a three-year cycle in which a third of properties in each jurisdiction are assessed each year. Any increase in assessed value is then phased-in over a three-year period to reduce the financial impact on the taxpayer. The financial impact on owner-occupied property is further reduced by counties imposing a cap on the annual assessment increase. This is known as the Homestead Tax Credit. Local jurisdictions are required to limit taxable assessment increases to 10% or less each year. Each jurisdiction has the authority to set its own cap for assessment purposes.

Assessments notices are sent by SDAT to taxpayers in early January. SDAT then certifies assessments to the local jurisdictions where the local tax rate is applied to convert the assessment into a tax bill.  Tax bills are sent to homeowners each July corresponding with the beginning of the fiscal year.

Goal of the Assessment Process

Article 15 of the Declaration of Rights of Maryland’s Constitution requires that all property be assessed and taxed uniformly.  State law requires all taxable property to be assessed based on its fair market value.

Approaches to Determine Fair Market Value

An assessment is based on an appraisal of the fair market value of the property. Assessors are the appraisers who estimate that value. There are three accepted approaches for calculating fair market value: 1) the sales approach; 2) the cost approach; and 3) the income approach.  Assessors use the  sales and cost approach to estimate fair market value of residential properties.  The income approach is used for properties that produce an income stream from rent or lease agreements.

The SDAT website describes both of these approaches.

THE SALES APPROACH

The premise of the sales approach is that the fair market value of a given property (called the subject property) may be determined by examining the sale prices of comparable properties. If similar properties sold for approximately $100,000, it could be assumed that other comparable properties would sell in the $100,000 range. The key to the sales approach is comparability and the availability of sufficient data.

COST APPROACH

The premise of the cost approach is that the fair market value of a given property equals the total of the cost to construct a similar improvement, less any depreciation for age and condition, and the price of the land. For example, if the cost to construct an 1,800 square foot rancher is $70,000, the cost approach assumes that a prospective purchaser would not pay more than $70,000, plus the cost of the land, for a home which is already built. If the existing house were not new, it may sell for less than $70,000. In general, the older the house, the greater the loss in value due to depreciation. A house which is 10 years old will usually sell for less than a comparable house which was recently built.

Assessors use a blend of these two approaches to appraise residential property.  This appraisal information is included in the assessment notices that property owners receive in January of each year.

Additional information on the real property assessment process can be found on SDAT’s website.

Information on the Property Assessment Workgroup appointed by SDAT can be found on Conduit Street.

 


Proposal To Reduce Homestead Credit Cap in Carroll County Fails

August 28, 2014

As reported by the Carroll County Times, a proposal to reduce the County’s Homestead Tax Credit cap by 1 or 2 percentage points failed during the most recent Carroll County Commission meeting.

The Homestead Tax Credit limits the increase in taxable assessments each year to a fixed percentage. The Carroll County Board of Commissioners voted, 3-2, Tuesday to reject separate proposals to lower the cap from 5 percent to 3 percent, and then from 5 percent to 4 percent.

Commissioners Robin Frazier and Richard Rothschild voted in favor of the proposal to provide property tax relief to middle class homeowners.

Commissioners Doug Howard, Dave Roush and Haven Shoemaker argued against lowering the cap citing the long-term implications on the county’s budget and that the decision should be left up to the new board of commissioners who will take office in January. The new board is likely to have three new commissioners.


Workgroup Reviews The Property Assessment Process, SDAT Office Staffing

August 27, 2014

The State Department of Assessments and Taxation (SDAT) Property Assessment Workgroup held its third meeting on August 26 to begin laying the foundation for the work of two of its subcommittees, one focusing on the physical inspection of property and the other on timely property pick-up.  According to the Charge, the Workgroup will examine and make recommendations on the following:

  • Whether a physical exterior inspection of each property is necessary to properly assess real property for tax purposes;
  • The Department’s ability to timely and adequately maintain changes in property status that may occur throughout the year and incorporate new properties in the system of accounts;
  • The extent of discrepancies in the calculation of certain tax credits and exemptions and approaches for improving accuracy; and
  • The feasibility of, and any legal impediments to, contracting with a third-party vendor to perform periodic audits of the property tax credit and exemption programs for which the Department calculates the credit or exemption or of other functions for which an external evaluation may provide greater accuracy.

The Workgroup will hold two meetings in September to review necessary documentation for the subcommittees focusing on tax credits and exemptions and contracting with a third-party vendor. It is anticipated that the other two subcommittees will begin meeting in the next couple weeks.

The three-hour presentation on August 26 provided an overview of the assessment process. It focused on the appraisal process, how value is determined through the use of different methods, the model that is used to assess property uniformly and how it is calibrated, and the ratios that are applied to ensure properties are assessed properly.  The presentation also provided information on staffing ratios, the number of employees in each SDAT local office, work load and budget information. This information will be useful as the physical inspection of property and the timely property pick-up subcommittees assess whether technology will serve as a cost-effective tool for improving these processes.

The next two full Workgroup meetings are scheduled on September 15 and 29 at 1:00 pm at the Maryland Department of Transportation.  Additional information on the formation of the Workgroup can be found on Conduit Street.

 

 


Transportation “Lockbox” And Special Election Constitutional Amendments Certified By Secretary of State

August 22, 2014

Two constitutional amendments were recently certified by the Secretary of State’s Office for inclusion on the statewide ballot for the November 4 election.  Question 1 will create a “lockbox” for State transportation funds and question 2 authorizes charter counties to fill  a vacancy in the office of county executive through a special election.

The specific ballot language is in a letter from the Secretary of State’s office. The transportation amendment limits the use of the State’s Transportation Trust Fund to the payment of principal and interest on transportation bonds and for constructing and maintaining an adequate highway system or any other transportation-related purpose; and prohibits the transfer of funds into the State’s General Fund.  However, the transfer of funds does not apply to highway user revenues for local governments.

As mentioned above, the special election amendment authorizes charter counties to provide for special elections to fill a vacancy in the office of chief executive officer or county executive.  Under existing law, charter counties may only authorize special elections to fill vacancies on the county council.

Many groups have begun advocating for the amendment to create a “lockbox” for transportation funding. In an opinion piece for Center Maryland, Don Fry, President and CEO of the Greater Baltimore Committee, encourages voters to support the “lockbox” amendment.

While lawmakers rightfully point out that most of the funding “borrowed” from the state’s Transportation Trust Fund over the years was eventually repaid, the deployment of dedicated transportation funding for other uses nevertheless detracted from the state’s ability to address infrastructure challenges.

Maryland voters interested in strengthening the integrity of our state’s transportation fund should remember to vote for Question 1 on the ballot this November.

AAA Mid-Atlantic also recently issued a press release encouraging support of the amendment.

MACo did not take a position on the legislation providing for the transportation “lockbox,” SB 829 (Ch. 422, Acts of 2013) as the bill did not provide specific protections of local highway user revenues. MACo supported HB 1415 (Ch. 261, Acts of 2014) providing for a constitutional amendment to authorize charter counties to fill a vacancy in the office of county executive through special election.


The World Comes to Garrett County

August 21, 2014

Garrett County, Maryland is hosting the International Canoe Federation Slalom World Championships in McHenry Maryland September 17-21, 2014, the Cumberland Times-News reports. The Adventure Sports Center International is the prestigious venue for the event and is the Only Mountaintop re-circulating whitewater course in the World.

As described on the ICF website, Olympic-level athletes from over 35 countries compete for the gold in this historic event.  The widely publicized competition is also expected to bring an economic boost to the region.

The ICF World Championships represent much more than a simple competition. It is a gathering of nations from around the globe joining together in sport and camaraderie. This is the 25 year anniversary of the 1989 World Championship held right here in Garrett County Maryland and only the second time in history. . . [it has been held in] the United States.

Quick Tidbits:
  • Over 600 athletes & team support staff from over 35 countries
  • Worldwide Television exposure via National & International Broadcast
  • 20,000 spectators over the course of the competition
  • Over 21.5 million broadcast viewers in Europe
  • $20M in economic impact for the region

For more information and to buy tickets, see the International Canoe Federation.


Candidates Pledge to Restore Local Transportation Funding, Work More Closely With Counties

August 19, 2014

Republican gubernatorial candidate Larry Hogan and Democratic gubernatorial candidate Lt. Governor Anthony Brown both pledged to restore local transportation funding during the Gubernatorial Forum held on Saturday morning of the MACo Summer Conference. However, they proposed different approaches to do so.

Courtesy Joe Lamberti/AP Photo

Republican Gubernatorial Candidate Larry Hogan (Courtesy Joe Lamberti/AP Photo)

During his opening comments, Mr. Hogan pledged to fully restore local highway user revenues, averaging $350 million a year, to local governments in his first budget. Lt. Governor Anthony Brown commented that he is “committed to take steps to restore and evaluate the formula.”  He stated that his Administration would “sit down with local governments and work out an agreeable approach and timeframe to restore local transportation funding and develop a formula that would withstand good times and bad.”

The Gubernatorial Forum was the closing session of the 2014 Summer Conference and gave MACo’s membership the opportunity to hear from the candidates on a number of issues of importance. The forum format allowed each candidate to make an opening statement, respond to five questions and make a closing statement. In addition to local transportation funding, question topics focused on economic opportunity, bay cleanup efforts, education priorities, and state and counties working together.

To create economic opportunity, Mr. Hogan said he would “change Maryland’s perceived anti-business attitude and let everyone know that Maryland is open for business; change the unfair regulatory environment; and reduce the tax burden on business.” Lt. Governor Brown stated that his “top priority is to create jobs.”  He would also invest in education and training programs and streamline regulations. He commented that counties must do the same. He stated that his “number one strategic goal is to establish Maryland’s business climate to be number one in the country.”

Democratic Gubernatorial Candidate Lt. Governor Anthony Brown Courtesy Joe Lamberti/AP Photo

Democratic Gubernatorial Candidate Lt. Governor Anthony Brown (Courtesy Joe Lamberti/AP Photo)

 

When asked about Chesapeake Bay cleanup efforts, Mr. Hogan stated, “the number one cause of pollution in the Bay is sediment from the Susquehanna and Conowingo Dam.” He commented that his administration would push back against the Environmental Protection Agency (EPA) and work to get Pennsylvania and Excelon to pay their fare share. Lt. Governor Anthony Brown asked the audience, “Do we take steps to leave the environment better or do we say that government doesn’t have a role in that issue and climate change?” He commented that you can’t support the environment if you rollback the stormwater management fee. He also stated that “if we’re going to tackle this issue, we need to broaden our coalitions for an all front effort. There is no silver bullet.”

In discussing education priorities, Mr. Hogan stated that “Maryland has spent more dollars on education, but problems have gotten worse.” He said he would make sure Maintenance of Effort is as flexible as possible and push down decisions and funding as local governments are closest to the problem. Lt Governor Brown offered three education priorities – school construction with technology upgrades, eliminating the achievement gap starting with the expansion of pre-K, and expanding career technology education.

The last question asked each candidate their ideas for state and county collaboration in their Administration. Mr. Hogan stated that his Administration “will have an open door and counties will have a seat at the table.” He said, “we’ll need full cooperation working with the counties to get things done.” Lt. Governor Brown responded that he has already taken steps to work more closely with counties by selecting Howard County Executive Ken Ulman as his running mate. He also commented that he would engage counties much earlier in the budget process and continue the Intergovernmental Council bridging state and local leaders.

Additional coverage of the MACo Gubernatorial Forum can be found in the following publications.

Washington Post
Baltimore Sun
Salisbury Daily Times

 

 

 

 

 


Follow

Get every new post delivered to your Inbox.

Join 2,362 other followers