As budget deliberations begin for the FY 2012 operating budget, the central question confronting the Wicomico County Council is whether to support a property tax increase of 6.5 percent to fill an anticipated $4.5 million budget deficit. County Executive Rick Pollitt, who introduced the tax increase in his proposed budget, notes that without it would require a second straight year of layoffs, decreased funding levels to Wor-Wic Community College, and call for an additional $2 million to be cut from the public schools system ($7 million to the anticipated $5 million). The Council, who received the budget only a week ago, have mixed reactions to the question at hand. The increase may generate needed revenue for the County, however the implications it would have on homeowners and businesses is also of concern. DelmarvaNow.com reports:
Pollitt said he doesn’t take the tax increase lightly, but his hand was forced by a historic decline in property assessments and the county’s slow recovery from the recession. His proposal takes the property tax rate from roughly 76 cents per $100 of assessed value to about 81 cents — roughly a 6.5 percent increase, but still within the revenue cap’s restrictions. The new rate would drive up the bill for a $150,000 home by $75 and hits businesses with a triple whammy: bumping up what they pay on their building, equipment and inventory.
“There is never a good time to raise taxes — and this is probably the worst time, with the economy,” said Council Vice President Joe Holloway.
However, Councilwoman Sheree Sample-Hughes said some citizens indicate they are willing to pay more in taxes if it means preserving their quality of life.
“You have to weigh the value against the cost,” Sample-Hughes said.
In anticipation of public commentary on the proposed tax hike, Pollitt has created a “tax calculator” that is available on the county website to assist homeowners in determining what their bill would be with a 5-cent property tax increase. There is currently not a calculator for how the tax increase would impact businesses.
To help soften the tax blow to homeowners, Pollitt suggests the county lower its Homestead Tax Credit rate from the maximum level of 10 percent to zero percent. That wouldn’t take effect until fiscal year 2013, and the council must pass a law authorizing it, Petersen said.
Councilman Bob Caldwell has lobbied for a zero percent rate for years. He said Salisbury instituted such a rate in the 1990s. He said it essentially prevents homeowners from ever having to pay for the increase in their assessments, although their homes are still assessed and those values will be passed on when ownership of a home changes.
“There is no logical reason for why somebody who has lived in a house from year to year should have to pay more because somebody walked down the street and says, ‘It’s not worth $150,000, it’s worth $175,000 now,’ ” Caldwell said.
Caldwell said it is difficult for him to comment on the budget at this point, but he already knows it will be a “tough” process.