Sun Investigation Shows Ups, Downs of State Mandated Homestead Credit

An extensive write-up in the Baltimore Sun Saturday (limited free views available) details the various policy issues arising in the implementation of the Homestead Property Tax Credit, a program designed to add predictability to property tax bills for homeowners, established by state law as a required program for each jurisdiction.

The article discusses the various policy issues arising from credits based on longevity — notably the equity issues raises by newer purchasers of similar properties.

In addition, the article discusses data and oversight issues with the program, and reveals some likely errors and oversights compromising local revenue sources. From the article:

State and city officials say they are working to fix problems with the homestead credit, including those identified by The Sun.

The city’s Finance Department began auditing tax credits over the summer to search for recipients getting undeserved breaks, particularly landlords. While the state determines property values and applies credits, the city collects the tax dollars.

The state assessments agency, meanwhile, has been processing tens of thousands of applications for the homestead credit over the past few years, cross-checking addresses on tax returns and drivers’ licenses to cut down on people collecting the credit on homes they don’t live in. Owners will automatically lose the break if they don’t submit their Social Security numbers to the state agency by the end of 2012 to make that check possible.

Both efforts are aimed at weeding out people who shouldn’t be getting the homestead credit at all, not finding those whose break is larger than they deserve.

“It’s always been a question of available staff and resources,” said Robert E. Young, director of the state Department of Assessments and Taxation, who noted that the average assessor today has nearly three times as many properties to reassess as in 1977. “What you often have to do in government is pick which audits or which checks will be the most productive.”

Read the full story here.

A follow-up editorial from the Sun ran on Sunday, calling for reforms of the system. Read the editorial piece here.

Michael Sanderson

Executive Director Maryland Association of Counties

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