Wednesday, April 2, 2008

Rockville property tax bills to go up

Even if rate stays constant, as expected, homeowners will pay more

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The proposed Rockville fiscal 2009 budget is not as bright as city officials claim, critics claim.

If the recommended tax rate is adopted by the council — a rate constant with last year’s rate — Rockville residents will still be paying $2.4 million more in property taxes in the coming year.

Mayor Susan R. Hoffmann last week called the city manager’s budget a ‘‘sunny proposal” because it includes no property tax rate hike.

But some members of the council disagree.

‘‘You can’t go around saying we’re not raising people’s taxes, when in fact we are raising them by a lot.” Councilman Piotr Gajewski said in an interview Monday.

Hoffmann’s next opponent will probably ‘‘call her on that,” he added.

The increased revenues that come from higher property assessments are needed, Hoffmann said Tuesday.

‘‘If we would reduce the tax rate and not keep in step with inflation, then we would have to cut services,” she said. ‘‘We’re fortunate in Rockville that we don’t have to raise rates, that we can continue to provide services at the needed level.”

Councilwomen Phyllis R. Marcuccio and Anne M. Robbins are pushing to cut the property tax rate for the third consecutive year. The rate is set at 30.2 cents per $100 worth of assessable property, the same rate recommended by the city manager for fiscal 2009.

A 10 percent annual cap on any increases of owner-occupied residential property assessments means tax bills are still catching up with assessed property values, which rose dramatically in recent years.

Despite the slowing housing market, city officials estimate the assessable value of residential properties will not catch up with the real assessed value until about 2011 or 2012.

That means city residents are likely to pay more for several years to come.

In real dollars, the city is projected to collect $32 million from property taxes in the current year. With the same tax rate, the next budget would pull in $34.4 million, Gavin Cohen, director of finance, said.

To maintain revenue, the property tax rate would be set at 27.4 cents per $100 worth of assessable property or 2.8 cents below the city’s proposed rate.

That fact has gotten lost in the discussion, Mark Pierzchala, president of the College Gardens Civic Association, said during a council budget hearing Monday night.

Pierzchala held up a homemade graph charting the historic gap between the city’s property tax rate and constant yield tax rate, the rate needed to produce the same revenue as collected the year before. Pierzchala, who ran against Hoffmann in November’s mayoral election, spent half a workday compiling the information, something he said the city should provide.

‘‘There’s really a tax increase,” he said in an interview. ‘‘Certainly it throws a different light on the whole budget. You can’t just talk about tax rates. You have to talk about what you’re yielding.”

For the past several years, the city has included the constant yield tax rate in its budget documents.

The constant yield tax rate does not account for inflationary costs, such as cost of living salary increases or jumps in commodity prices.