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Municipalities may get excise fee

September 14, 2004|by TARA REILLY

tarar@herald-mail.com

The Washington County Commissioners are considering reimbursing municipalities for collecting the county's tax on new construction.

The County Commissioners are expected to discuss today a proposal that allows municipalities, including the City of Hagerstown, to withhold a 2 percent administrative fee from the excise tax revenue collected by municipalities.

Commissioner James F. Kercheval said the county anticipates the excise tax will generate $1.8 million this fiscal year - fiscal year 2005 - which would mean about $36,000 of that amount would go to the municipalities.

In fiscal year 2006, the next fiscal year, the county anticipates the tax will raise $2.7 million. About $54,000 of that amount would go to municipalities, under the proposal.

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"It's just reimbursement money for staff time," Kercheval said.

Counties typically allow municipalities to withhold 2 percent to 5 percent for such tax collections, he said.

Commissioners President Gregory I. Snook said he spoke with the mayors of the county's municipalities several months ago about the proposal. Most wanted to wait and see how collection of the tax went before they discussed any reimbursements.

Boonsboro Town Manager John Kendall said collecting the county's excise tax hasn't been a hassle, but that it does take up town employees' time. Town personnel can spend 10 minutes to more than an hour dealing with the tax, depending on the type of construction project, he said.

"Yes, we would certainly support the 2 percent being reimbursed," Kendall said.

The commissioners approved the Excise Tax Ordinance on June 17, 2003. It became effective on July 1, 2003.

The tax applies to new construction in the county and is charged on a per-square-foot basis. Revenue generated by the tax is spent on school renovation and construction; public safety and public infrastructure projects and toward reducing county debt.

The tax is $1 per square foot for multi-family residential construction, such as town houses and duplexes.

The tax on single-family construction is 50 cents per square foot for this fiscal year and 75 cents per square foot beginning in fiscal year 2006. The charge was 25 cents per square foot in fiscal year 2004.

In addition to the administrative fee provision, the commissioners are expected to discuss making the excise tax's definition more specific about the type of education construction projects eligible for tax funding.

The commissioners are considering adding primary, secondary or higher education construction projects as eligible to receive excise tax funding to ensure that Hagerstown Community College isn't left out of the mix.

Snook and Kercheval said HCC faces renovations and expansions as a result of the college's increasing enrollment.

"We're just trying to keep ahead of that," Kercheval said.

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