Change the excise tax? OK, but do it right in '07

February 16, 2007

Reading the story about the Washington County Commissioners' proposal to change the county's excise tax formula makes us feel as if we're watching a rerun of an old movie that wasn't that good the first time around.

Once more, after the session has started, when delegation members are busy with other duties, here come the commissioners, asking for changes in the formula. Again.

The need is there because the county estimated the tax on new construction would generate $15.6 million in fiscal 2007.

Instead, it's going to fall $11 million short, forcing the county to use millions from its 2006 surplus to plug that financial hole.

According to Commissioner William Wivell, it also means that the county doesn't have any money to fund new revenue sharing with the City of Hagerstown.


Debra Murray, the county's director of budget and finance, told the commissioners that the shortfall came because the county estimated that instead of 1,200 new homes being built, only 650 to 700 building permits will be issued.

And, Murray said, more homes under 1,500 square feet were built. Instead of the $13,000 fee being charged for most single-family homes, those under 1,500 square feet are now charged only $1 per square foot.

Didn't anyone anticipate the possibility that developers would do the math and save more than $10,000 by building smaller homes?

Yes. Two years ago, Herald-Mail columnist John Colson predicted that developers would do exactly that. Colson quoted Commissioner James Kercheval as saying that the square-footage change was added to help make the development of a modular-home community feasible.

"Instead of dealing with modular homes," Colson said, "Kercheval wrote the square- foot exemption. Now, every developer can milk the county treasury."

So, in an effort assist with the construction of affordable homes, a mistake was made. We have a question, a warning and a recommendation.

Didn't anyone see this trend developing prior to the start of the session? If they had, legislators would have had more time to make sure that - finally - the tax will produce the revenue needed to build new schools.

We warn the delegation that any new legislation must take into account projects that are already in the pipeline.

The county has already been sued twice by developers who claimed that the rules concerning fees were changed in the middle of the game.

If a developer has had a preliminary consultation with county planners in which representations were made about what the taxes and fees would be, upping the tax for that project now will only lead to more litigation.

Finally, to avoid such problems in the future, Washington County's General Assembly delegation members should tell the commissioners that no legislation raising or altering county taxes will be introduced unless the request is made three months before the session starts.

Emergencies happen, but when they happen to the same people repeatedly, something is wrong with the process they're using.

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