Washington Co. Commissioners have different views on excise tax rate

October 25, 2007|By JOSHUA BOWMAN

Washington County would have to set a residential excise tax rate of $3 to $4 per square foot to meet budget estimates by 2013, according to a report prepared by the county's budget and finance department.

The three-page handout was given to the Washington County Commissioners as they began their review last week of the Excise Tax Task Force's report, which recommends setting the tax rate at $2 per square foot.

The commissioners have reached an informal consensus on most of the task force's 14 recommendations, but disagree on where the tax rate should be. Some have argued for a $2 per-square-foot rate; others say the rate should be closer to $4.

The tax is charged on new home construction and pays for new school capacity.

According to the budget and finance report, a $2-per-square-foot tax rate would leave the county $2.8 million to $5.2 million short of projected revenues.


Assuming a "moderate" growth in new home construction, the county would have to charge $4 per square foot to meet budget projections by fiscal year 2013, according to the report.

"It's pretty clear that $2 per square foot would put us in a serious deficit position," Commissioner James F. Kercheval said.

Commissioner Kristin B. Aleshire said he favors a rate of $3 to $3.50 per square foot, assuming an average of about 800 new homes per year.

He said the county needs to ensure that it establishes control over new residential construction when the housing market rebounds.

Commissioners President John F. Barr suggested Wednesday that establishing a limit on new construction will be the least of the county's worries over the next five years.

"To be honest, I see us in a major downturn here," Barr said. "A turnaround might be a few years out, and we need schools now."

Barr said he favors a $2-per-square-foot excise tax, but recommended an increase in the transfer tax to "account for school seats taken up by people who buy existing homes."

Barr said the county also might have to borrow money to pay for new schools.

Commissioners Vice President Terry L. Baker said Wednesday he had not decided what rate he favors, though he agreed with Barr that the excise tax should not be the county's only source of school construction funds.

"The shortfalls in the (budget and finance report) do concern me, but we need to be looking at other avenues to generate money," Baker said.

The commissioners will discuss the task force's recommendations Tuesday before sending their recommendations to the county's delegation to the Maryland General Assembly, which would have to pass any changes to the county's excise tax ordinance.

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