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New taxes OK'd

June 18, 2003|by TARA REILLY

tarar@herald-mail.com

The Washington County Commissioners on Tuesday approved two new taxes that are expected to raise $2.4 million for expenses that include school construction and agricultural land preservation for fiscal year 2004.

The County Commissioners voted 3-2 to enact both a transfer tax on real estate transactions and an excise tax on residential construction costs, moves supported by preservationists and opposed by builders and developers.

Commissioners President Gregory I. Snook and Commissioners Doris J. Nipps and James F. Kercheval voted to impose the taxes.

Commissioners Vice President William J. Wivell and Commissioner John C. Munson voted against the taxes.

The excise tax will be levied at $1 per square foot on the construction of all multi-family housing units, which include two-family homes and townhouses.

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The tax rate on single-family homes will increase on a yearly basis through fiscal year 2006. The tax on the construction of single-family homes will be 25 cents per square foot for fiscal year 2004, 50 cents for fiscal year 2005 and 75 cents for fiscal year 2006.

Excise tax revenues, projected to be $696,000 for fiscal year 2004, may be used for school renovation and construction, public safety capital expenses, public infrastructure projects and debt reduction, according to a county document.

Snook said Tuesday night the commissioners have not decided how they will distribute the revenue from the taxes.

At Kercheval's suggestion, a .5 percent transfer tax will be imposed on the transfers of properties with an exemption for the first $50,000. Washington County residents who are first-time home buyers will receive a 50 percent reduction on the tax on homes under $115,000.

The transfer tax revenue, which the county expects will be $1.7 million for fiscal year 2004, may be used for school renovation and construction; public safety, including grants and loans to volunteer fire and rescue companines for capital expenses; tranportation projects and debt reduction.

The commissioners who supported the tax have said the increasing construction needs as a result of aging public schools played a large part in their decision.

"I don't think there's any way not to do this without causing hardships on schools..." Kercheval said.

Munson said he opposed the taxes because he didn't think the majority of county taxpayers supported it.

"This is political suicide, and my vote will be no," Munson said.

Wivell said he didn't agree with gradually increasing the excise tax on single-family homes. He also said he opposed the transfer tax, because Maryland already has some of the highest priced homes in the country.

But he said he would have considered the transfer tax if it went toward the costs of consolidating some public schools.

Instead, he said he thought the tax revenues would be put into the county's general fund budget and be seen as an opportunity to increase spending.

Debi Turpin, executive director of the Home Builders Association of Washington County, told the commissioners Tuesday that home buyers would end up bearing the brunt of the taxes.

"What everyone seems to forget is, as in any business, any increased cost related to development or housing is passed directly to the buyer," Turpin told the commissioners at a public hearing last week. "If the cost of leather increases, so does the cost of shoes."

She said some groups in the county would like to see development stopped and believe that the new taxes might cause builders to go elsewhere.

"However, the reality of this theory is take away homes and you take away jobs," Turpin said. "Continue to add new taxes and fees and the middle class will be priced out of the home-buying market and forced to remain in rental properties or leave the county."

County resident Carroll Earp said Tuesday he didn't think the taxes would discourage home buyers from coming to Washington County.

Another county resident, Joe Lane, said he thought the excise tax rate wasn't high enough to cover infrastructure improvements that will be needed because of growth.

Rather than create "world-class public schools," as endorsed by the county and Board of Education, he said the county would be building world-class portable classrooms, because the schools won't be able to handle growth.

"It's either raise taxes for everyone, or ask more from the developers and new residents coming in..." Jim Laird, of Citizens for the Protection of Washington County, told the commissioners.

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