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Council explores city excise tax

July 03, 2003|by SCOTT BUTKI

scottb@herald-mail.com

Two Hagerstown City Council members said Wednesday the city should find out if it can impose its own excise tax instead of merely collecting Washington County's new excise tax revenue and turning it over to the county.

As the situation stands, the city will not be reimbursed for time its employees spend collecting excise tax revenues on projects in the city.

The city wants to meet with county officials to discuss reimbursement for time spent collecting the tax, Finance Director Al Martin said.

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"We need to sit down and talk about it ... It is certainly a possibility," County Administrator Rodney Shoop said Wednesday.

Councilman Lewis C. Metzner on Wednesday said the idea of a city excise tax is being explored, in part as a bargaining tool to get reimbursement for collecting the county tax. The city will have a better chance of being reimbursed if it can follow through on the threat, he said.

At Tuesday's council meeting, Metzner and Councilman Kristin B. Aleshire said they wanted to know if the city needs state enabling legislation to impose an excise tax.

If the county is going to tax projects in the city then the council should try to get the city's share, Aleshire said Wednesday.

The county's excise tax went into effect Tuesday, the first day of the fiscal year.

The city could require that applicants for residential building permits go to the county offices, pay the excise tax and then return to the city with proof of payment, Martin said.

Instead, to be customer-friendly, the city chose to collect the tax at its offices, he said.

At Tuesday's council meeting, City Administrator Bruce Zimmerman estimated the county will receive $300,000 to $400,000 this fiscal year in excise tax revenues for residential construction in the city limits.

Earlier this year, Mayor William M. Breichner asked the Washington County delegation to the Maryland General Assembly - which gave the county authority to impose the excise tax - to require that the city get a cut of the excise tax revenues.

Delegation members said they would support that request only if the city and county reached a compromise on water-sewer disputes. That has not yet happened.

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

The tax rate on single-family homes will increase each year 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 at $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.

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