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City tax cut does more harm than good

June 15, 2008|By Jonathan Burrs

Beginning July 1, Hagerstown city property owners will begin to save roughly 1 cent per every $100 of the assessed value of their property. According to the May 27 Herald-Mail article by Dan Dearth, the council voted 3-2 to decrease the property tax from the current rate of 79.8 cents per every $100 assessed to 78.8 cents per every $100 assessed.

The tax decrease spread across an entire year equates to a $10 savings for every $100,000 of assessed property value, and according to the supporters of the decrease, it will require the city to tap the government's reserve fund.

Some members of the council, prompting a contentious vote, dismissed concerns from City Finance Director Alfred Martin who opposed the tax decrease. Martin estimates that the resulting decrease in city revenue will be approximately $300,000, at a time when city officials are trying to pay for higher gas prices and other increasing expenses.

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Martin did not believe this was the best use of the reserve fund, which usually is "reserved" to pay for unforeseen expenses. Additionally, the reserve fund is an asset-owned base, which means the value of the fund is not as liquid cash on hand.

I recently had an opportunity to debate this issue on a Herald-Mail online forum with a few local residents and regular forum posters. As with most topics, there were those who supported the tax decrease and those who opposed it.

Some argued that any tax decrease was better than any tax increase, while others suggested the move was politically motivated. Some made bold predictions and claims that taxpayers could benefit from the cut because area businesses may reduce the cost of goods and services to consumers due to the miniature savings business owners would enjoy as a result. However, this position was supported only by conjecture and no concrete or logical theoretical evidence was offered.

However, one theory offered, the "trickle down effect" of tax relief as an online forum poster wrote, was particularly disingenuous, especially since it did not square to the business model the theorist presented as evidence for supporting the tax cut.

Based on the information provided regarding the circumstances surrounding this vote, one could generally determine that little if any practical application of the tax decrease was thoroughly investigated by the mayor and supporting council members.

For example, the manner in which the proposal was introduced to the council for vote was as follows, according to Dearth's article: Council member Lewis Metzner introduced the decrease about one hour before the council vote to maintain the current rate of 79.8 cents for fiscal year 2008-09 - not nearly enough time for other members to study the sudden change.

Council members Kelly Cromer and Penny Nigh both dissented, citing the quickness with which the proposal was introduced and the finance director's advice as reasons for not supporting the tax decrease respectively.

What would cause the city council to haphazardly provide property owners with a nominal tax decrease against the advice of the city's finance director? Is it sensible government to unnecessarily reduce city revenue at a time of across-the-board increases in city expenses and a time of serious economic uncertainty?

In my opinion, the tax decrease is as unnecessary as it is a matter of poor policy. The manner in which the decrease was introduced and accepted reeks with insincere intentions and overtones of political feel-good measures rather than smart policy designed to best utilize taxpayer's money. It is not sensible policy to intentionally decrease government revenue and lower reserve finances without a justifiable cause.

Additionally, it is a poor practice for elected officials in a municipality to blatantly disregard the professional opinions of decision-makers integral to the daily operations of government. One need only review the numerous warnings former Maryland Gov. Parris Glendening ignored from former state Comptroller William Donald Schaefer regarding spending in the latter part of 2001, when Maryland headed into a recession. The adverse results of those actions are still being felt years later, including an unbalanced budget and more recently, the largest tax increase in state history.

Furthermore, the Hagerstown City Council has previously tapped the reserve fund during similar difficult economic times. The result was that economic challenges continued to increase, hindering the city from sustaining budget needs and resulting in the largest increase in city history!

While the mayor and council declare a small victory for property owners, municipal government department heads, city employees, as well as city residents should brace for government cutbacks and tax increases in other areas should economic conditions continue to deteriorate. My question to the mayor and council is simple - what do the facts support?

Jonathan R. Burrs is a Hagerstown resident who writes for The Herald-Mail.

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