Selling a house in Anne Arundel is getting more difficult for Realtors like George Savani.
“Because of the headlines, people are afraid to take a step,” said Savani of Champion Realty.
Home sales are down 17 percent in Anne Arundel since the previous year; as houses sit on the market, the county loses out on revenue.
Real estate taxes such as the transfer and recordation taxes go to the county and state governments.
Because of the slump, the county is expected to see a 20 percent drop in revenue during the current fiscal year, said John Hammond, the county?s budget officer.
LOCAL IMPACT
OF HOUSING CRUNCH
The nation?s housing crisis is no secret, and its effects are being felt in Anne Arundel.
In March, the average time ahouse sat on the market was 139 days compared with two years ago, when it was 60 days, said Bob Johnston, government affairs director for the Anne Arundel Association of Realtors.
Since 2006, real estate tax revenue has steadily declined, resulting in a projected $30 million loss.
Property tax revenue ? the county?s principal source of income ? also has dropped. New houses get a higher tax rate in their first year before falling under the county?s tax cap.
“They were getting money outside the tax cap, and with that going away, it?s going to get harder for the county,” Johnston said.
Even though the real estate taxes account for 9 percent of the county?s revenue, the effect is felt in marginal programs, Hammond said.
LESS REVENUE HURTS
PROGRAMS
County officials wouldn?t say which “marginal programs” could fall victim to budget cuts, as the administration is waiting for today?s fiscal 2009 budget message before discussing specifics.
But each department could slash up to 5 percent of its budget this year.
“Every year we move about 1 percent ? $10 million ? from one category to another,” said Councilman Ed Reilly, R-District 7.
“I don?t think we even have that much we can influence. It is going to be very tight.”
The state transfer tax is tied to Program Open Space funding that Anne Arundel uses to purchase parkland and farms to save from development.
But the General Assembly cut about $2 million in POS funding, officials said.
The county transfer and recordation taxes aren?t tied to specific expenditures, but revenue reductions could hurt the capital budget, which pays for large projects such as school construction and road improvements.
“Rather than full replacement of the road, there may be less costly alternative until the road [condition] is upgraded to immediate repair,” said Tracie Reynolds, public works department spokeswoman.
A continued dip in revenue could make it difficult to maintain current services in education, which takes up half of the county?s expenditures, said Susan Bowen, the school system?s budget officer.
VOLATILE REVENUES
In the fiscal 2008 budget, the county lists transfer and recordation taxes as the “most volatile revenue category,” and programmed in expected drops.
Now that the housing market is declining ? as well as the revenues ? many say the county shouldn?t rely on such an unstable income source. The county?s Spending Affordability Committee bases its annual recommendation on the growth of the more stable income tax.
“If our own income went up, we?d put something away for a rainy day,” Savani said.
Anne Arundel has a rainy day fund and extra funding; but financial experts say balancing revenue shortcomings with savings is unwise. Hammond said the county is doing well in other revenue categories, such as income and property taxes, and will have to trim its already lean budget to account for any losses.
