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Assessments cap down

Council votes for 5 percent limit on owner-occupied properties

Council votes for 5 percent limit on owner-occupied properties

October 25, 2006|by JENNIFER FITCH

HAGERSTOWN - The Hagerstown City Council voted unanimously Tuesday night to cap the increase of assessments on owner-occupied properties at 5 percent for the 2007-08 fiscal year.

The vote reduces the assessment cap from 10 percent, where it has been since at least 1993, according to the Maryland Department of Assessments and Taxation.

"We're going to cut the maximum increase in half," City Finance Director Alfred E. Martin said.

Maryland's assessments on owner-occupied properties, which are conducted every three years and are based on market values, are capped by the state at a 10 percent annual increase for tax purposes. However, state law gives counties and municipalities the option of lowering that cap.

Washington County is implementing a 5 percent cap for the 2007-08 fiscal year.

The average annual assessment increase without the cap in Washington County in the past three years was 19.5 percent, the Maryland Department of Assessments and Taxation said in a January report. City projections show that same increase at 12.2 percent for the current fiscal year, Martin said.

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Under the Homestead Property Tax Credit, the homeowner does not pay real estate taxes on the assessment increase above the capped limit.

Assuming that a property's old assessment was $100,000 and that the phased-in assessment for the first year is $120,000, a capped increase of 5 percent would create an assessment of $105,000. The "credit" is created because taxes are not due on a possible $15,000 of assessed value.

If the tax rate in the city were to remain at 79.8 cents per $100 of assessed value, the tax credit would be $119.70 ($15,000 / 100 x $.798). The county's rate is currently 94.8 cents per $100 of assessed value, Martin said.

State taxes will continue to be levied based on the 10 percent capped increase, he said.

"We get asked a lot of questions on how we're going to help certain segments of our population like the seniors and limited income, and this is exactly how we do it and exactly why we need the state to follow suit as well," Councilman Kristin B. Aleshire said.

The city and county considered lowering the cap from 10 percent to 5 percent for the 2006-07 fiscal year but missed a state deadline, Martin said.

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