A September 22 Maryland Reporter.com article discusses the signficant impact the housing market collapse has had county transfer tax revenues and the future impact it will have on property tax revenues.

Maryland counties are feeling the pain of the collapse of the housing market. From fiscal 2006, the height of the housing boom, to fiscal 2010, they have lost $345 million in revenue from transfer taxes that are charged every time a property is bought or sold.

Revenues to counties from property taxes will be declining soon too, officials said, as the decline in housing prices starts reducing the assessable base for this key source of local funds.

[Transfer tax losses] from residential and commercial properties vary by county. Leslie Knapp, associate director of the Maryland Association of Counties, said there is not much the counties can do to compensate. “They could raise property taxes, but that is politically difficult to do,” he said. “They could charge other fees and taxes – hotels, impact fees – but much of that is tied to economic growth.” …

Neil Bergsman, director of the Maryland Budget and Tax Policy Institute, said property tax is critically important revenue for counties and Baltimore City. It is a minor revenue source for the state, and is dedicated to debt service on state bonds. …

“So far, the big problem for the counties has been the transfer tax, which has collapsed,” said Bergsman. “They’ve been knocked down by the [personal] income tax shortfall, and just when they’re ready to get back up, the decline in property tax will hit them in a couple of years.” …