If The Moyer Administration Is Our Guide, Property Taxes Need A Cap

A couple of weeks ago Mayor Moyer took the offensive against critics who say property taxes have been allowed to grow too rapidly under her administration. Due to my extensive experience with having money taken by the government, I feel uniquely qualified to rebut some of the claims made by the Mayor.

The editors noted, accurately, that the city's property tax rate was last increased in 1999 to 68 cents and that today it is 53 cents. This is a 15-cent reduction, something no other jurisdiction has achieved over the last 10 years.

The Homestead Credit is what allows the Mayor to make this goofy claim. So, the amount of property taxes you pay is calculated by the tax rate times the value of your house. If either one of them goes up, your taxes will go up. For the majority of the Moyer administration, the value of your house went up like crazy. The fact that the tax rate went down doesn't mean the city saved you any money. The reason that other jurisdictions haven't lowered the rate that much is that they limit the growth of the taxable value of your house to 2% per year, and the city lets it grow at 10% per year.

During the same period of time when property values were going up statewide, the county tax rate was going up by 2.1 cents. In fact, the county tax rate over the last 10 years - at 54 cents in 1999 after going up to 56.1 cents in 2005 - is now 1.7 cents less than the 1999 rate.

By law, a resident of AA County cannot pay an increase in property taxes of more than 4.5% over the previous year. This is due to the tax cap. Here are the collected property taxes in the city, going back to 2002, and the percent increase over the previous year:

2010 $34,536,000 (budget) 9.6%
2009 $31,489,000 (proj) 11.7%
2008 $28,190,000 12.7%
2007 $25,011,400 7.6%
2006 $23,245,060 6.3%
2005 $21,862,569 7.9%
2004 $20,248,310 6.3%
2003 $19,049,000 4.7%
2002 $18,187,380

THIS IS CRAZY! The best way to increase city revenue is to successfully lobby the state and county for more money. You know this wasn't happening because the Mayor doesn't even talk to the county executive. The next best way to increase city revenue is to increase fees because at least people can control how much they use and reduce their cost (water, sewer, etc.) The worst way to increase city revenue is to raise property taxes, because the citizen has absolutely no control over how much they are paying without moving, which is really hard to do. Look at those percentages! Remember, if we were looking at the county, none of those percentages would be more than 4.5%. Property taxes increased more in the city than in the county in every year of the Moyer administration.

If you live in the city, your tax bill includes taxes for all three jurisdictions. As the assessed property value rose, the state property tax rate went up, the county property tax rate went up and the city's property tax rate went down 15 cents. The city could have done what most jurisdictions did, and simply maintained or increased the property tax rate to really take advantage of increased value.

This is the ultimate pot-calling-the-kettle-black situation. The city took massive advantage of increased home value, allowing their assessed base to grow by 10% per year. Lowering the tax rate "mercifully" lowered the increase in your taxes to, say, the rate charged by a car dealership--instead of the rate charged by my credit card companies. In 2008 and 2009, the city maintained the tax rate in such a ridiculous fashion that your property taxes actually went up by MORE than the 10% which is inconceivably arrogant.

The editorial ends with, "Does Annapolis need elected officials who will reduce spending - or a law that does it for them?" The last statement suggests the editors have already started an argument for the city tax cap, an idea that would certainly lower our excellent AA + Bond rating, eliminate our stable economic outlook and eventually bankrupt the city. If the tax cap is their agenda then the editorial is an example of manipulation of public opinion.

I recently made the argument that a good bond rating is at least partially a measurement of the city's willingness to stick it to the taxpayers. The increase in property taxes proves my point. Contrary to what politicians might say, good finances can actually be achieved by cutting costs as opposed to always raising taxes. Hopefully the next Mayor will realize this, but since they probably won't, we need a tax cap to realize it for them.