Marylanders will pay the same state property tax rate next year as they have for the past four years, the Board of Public Works voted Wednesday, but keeping rates low could cost the state $20 million by fiscal 2012.
The board voted to maintain the state property tax rate at 11.2 cents per $100 of assessed value, at the recommendation of the Commission on State Debt. Current rates — which cost Maryland residents about $554 on a $495,000 home — could stay the same without any help from the state, a report commissioned by the panel said. But early projections show a possible $20 million cost to the state for maintaining the 11.2-cent rate in fiscal 2012 — and increasing to $130 million for holding the same rate in 2013.
The state set aside $29 million for fiscal 2008 to keep rates down after falling home values and changes in bond premiums raided the tax revenue pot. The state must restore lost revenues, because the property tax receipts pay for state bonds issued for capital projects, such as road maintenance and construction projects.
The commission’s projections are subject to change with a number of economic factors, said Patti Konrad, who handles debt management for the state Treasury Department. She named property values, bond premiums and interest rates as the most significant variables in her projections. Konrad works for state Treasurer Nancy Kopp, one of three members on the Board of Public Works.
Keeping property taxes down has been a talking point for Gov. Martin O’Malley, whose 2010 Republican contender — former Gov. Robert L. Ehrlich — raised state property taxes in 2003.
“Today’s action by the board keeps the state property tax at 2006 levels, after it was raised by 56 percent by the previous administration,” said O’Malley, a member of the Board of Public Works. He added that he proposed lowering the state’s property tax during the 2007 special session, which was not approved.
But Marylanders could still see an increase in their property taxes this year, as counties and municipalities consider raising the taxes to make up for cuts in state funding. In Maryland, state property taxes are additional to local property taxes.
