Montgomery County’s average property owner could see his annual property tax bill go up about $80 in fiscal 2014, which starts July 1.
County Executive Isiah Leggett’s proposed fiscal 2014 budget includes a 2.2 percent increase in property taxes.
Leggett (D) said previously that his budget “holds the line on property taxes,” setting the rate at the limit allowed under the county charter, which ties tax increases to the consumer price index.
Finance Director Joseph Beach said Leggett’s proposed budget increases the county’s weighted real property tax rate 1.8 cents, from 99.1 cents per $100 of assessed value to a little more than $1 per $100 of assessed value.
On the average property — which in fiscal 2014 has an assessed value of $443,363 — that is an increase of $6.67 a month, or about $80 a year.
However, the county’s weighted rate is not what every taxpayer will pay.
Montgomery has 23 different property tax rates because of its various taxing districts, Beach said. The county’s weighted rate is a composite of those 23 rates.
Depending on where taxpayers live in the county, they could pay a higher or lower rate, Beach said.
Joan Fidler, president of the Montgomery County Taxpayers League, commended Leggett for the years he kept tax increases below the charter’s allowed maximum. But she questioned why, now that the economy is showing signs of recovery, Leggett has proposed a higher increase.
Fidler suspected Leggett has proposed increasing taxes to the charter limit for fiscal 2014 because he has particular items he wants to fund.
“That is one that is somewhat disappointing,” she said.
Leggett’s budget increases county government spending 3.9 percent, continuing a three-year plan to add 120 new police department positions and restoring money from some deep cuts made to libraries in leaner times.
Property taxes are expected to generate $1.5 billion for the county in fiscal 2014.
Fidler said the overall concern taxpayers have with raising taxes is the effect on Montgomery’s ability to attract businesses, which, in the long term, increases the revenue base and provides additional employment.
“Note that the welcome signs to the Virginia exit ramps say ‘Virginia — Open for Business’; in Maryland, the signs read: ‘Maryland — Please Drive Gently,’” she said.
The only taxes proposed to increase in the $4.8 billion budget are those on property.
But the tax that threatens to dominate discussion as the county council finalizes the fiscal 2014 budget, and is most concerning to Fidler’s organization, is the energy tax.
Leggett has proposed maintaining current energy tax rates, generating $222.3 million in revenue.
In May 2010, at the executive’s recommendation, the county council raised the energy-tax rate by 85 percent, or an estimated $13 per month for the average residential customer.
For residential electric customers, the rates jumped from 0.5 to 1.3 cents per kilowatt-hour.
Energy taxes for nonresidential electric customers, such as businesses and government, went from 1.3 cents to 2.2 cents per kwh.
With the new high rates, the council passed a sunset date, when the new, higher rates would expire and the old rates would apply.
Under the sunset, energy taxes were to revert to the lower rates July 1, 2012, the start of fiscal 2013.
But, last May, the council instead chose to reduce the rate gradually, dropping it only 10 percent, to 1.2 cents per kwh for residential electric customers and 2.1 cents per kwh for nonresidential electric customers. Leggett’s fiscal 2014 budget keeps the fiscal 2013 rate for at least another year.
Councilman Philip M. Andrews said he is working on a plan to continue the gradual reduction of the energy tax.
Andrews (D-Dist. 3) of Gaithersburg proposed reducing the energy-tax rate again in 2014 by 10 percent, costing the county $11.4 million in revenue. To accommodate the lost revenue, he is proposing the county reduce Leggett’s proposed employee salary increases by the same amount.
Leggett’s recommended package of pay increases for county employees will cost the county $31.6 million, adding $15 million to his fiscal 2014 budget.
Andrews said his proposal would reduce those increases across the board by about 35 percent.
Taxpayers who were promised a sunset in the high energy-tax rate question why the county cannot reduce the energy tax if it can afford generous raises to employees, Fidler said.
But, she said, “once you put taxes on the budget books, it’s difficult to remove [them],” adding that expenditures generally rise to meet income.