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New year, new thoughts about taxes

July 08, 2013

The new fiscal year has begun for local governments, and with it comes the time for gazing into the crystal ball.

The City of Hagerstown introduced a $133 million budget in May that calls for no property tax increase. In the same breath, the council warned that this tether on taxes might be about to snap.

Property will be reassessed this year, and the results for the city treasury are unlikely to be good.

Council member Martin Brubaker said that city staff is estimating that the value of city property is liable to shrink by 8 percent. “We could be down 8 percent in our basic revenue area and have to overcome that just to maintain the regular operations of city government,” Brubaker said.

This might be the worst news the city has had lately. It means that the value of Hagerstown is shrinking to an alarming degree, and that the city might have to raise tax rates, not to do anything new, but simply to keep its head above water.

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The real estate market is picking up in other areas of the county, but Hagerstown is lagging. At some point, property value will bottom out — indeed, it might have bottomed out already — but it’s a long slow climb out of the abyss.

But city taxpayers outraged over any impending tax increase might want to take a quick look in the mirror. This past election sent a strong anti-development message to the council.

This, however, is a good lesson in what happens when cities don’t invest in themselves. Instead of new projects generating more projects, better neighborhoods and higher property values, the real estate market enters a death spiral.

More properties decline in value, are abandoned or even burn, thanks in part to indifferent, out-of-town owners. This in turn decreases the value of the properties that remain.

Vocally opposing developments such as the stadium and the downtown school board might feel good in the moment, but in the long run a stagnant city will wind up costing everyone who lives here.

In fact, the road to lower taxes isn’t always through less spending. Projects that generate construction and jobs, even if taxpayer funded, can more than pay for themselves by raising the value of the neighborhoods they touch. And like ripples from a stone, this increase in value can spread throughout the city.

It can be argued that more tax on less value won’t cost any more than less tax on more value.

But if we have a choice between the two, we would prefer a better, more vibrant city spurred on by new projects that will benefit one and all in ways that go far beyond simple taxation.

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