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Revenue from excise tax not what county had hoped

July 27, 2007|By JOSHUA BOWMAN

HAGERSTOWN - Washington County's excise tax revenues fell sharply in fiscal year 2007, coming in at $11.5 million below budget projections, Washington County Budget and Finance Director Debra Murray said Wednesday.

The county budgeted $15.3 million for excise tax revenues in fiscal 2007, which ended July 1, but received only $3.8 million, Murray said. The county earned $7.1 million in residential excise tax in fiscal 2006.

Murray said she knew in September that excise tax revenues for fiscal 2007 would not meet budget projections. She sent a memo to the Washington County Commissioners, who shifted about $5 million from other areas to help cover the projected shortfall.

The remaining $6.5 million will hopefully come from surplus funds generated in fiscal 2007, Murray said.

"Anything extra is basically going to go toward this," Murray said.

Murray said a slowdown in the housing market is to blame for the shortfall in the tax, which is charged on new homes built in the county. She said permits for new residential construction in Washington County fell 40 percent between 2006 and 2007.

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Residential excise tax revenues help pay for new school construction and other projects in the county.

Commissioner James F. Kercheval said while projects funded in fiscal 2007 were not affected by the shortfall, plans for an alternative school and some maintenance and road projects scheduled for funding in fiscal 2008 were delayed.

Kercheval said the impact of the shortfall was minimal because the county historically has not relied too heavily on excise tax revenue.

"We tend not to bet the farm on such a volatile income stream," Kercheval said.

The excise tax first was proposed in 2003 and began in fiscal 2004. In that year, it brought in just more than $1 million.

Two years ago, the fee was changed from a formula based on square footage of a new structure to a flat fee.

In fiscal year 2006, the first year after the formula was changed, residential excise tax revenues increased $2.3 million.

A state law that went into effect July 1 set up a task force to review the county's excise tax structure and rates, and also lifted the cap on the current excise tax fees for one year.

The county commissioners have said they likely will wait for the task force's recommendations, due in September, before making any changes to the tax structure.

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