ANNAPOLIS – Maryland’s tax collector warned on Wednesday that residents may need to pay $1.4 billion extra to pay off the state’s debt in the next few years.
“I just want to indicate to everyone that we have some significant problems looming on the horizon,” said Comptroller Peter Franchot during a Board of Public Works meeting in which officials kept the state property tax at 11.2 cents per $100 of assessed value.
Franchot pointed to a new report from the Commission on State Debt showing shortfalls of $246 million, $311 million, $395 million and $440 million in fiscal years 2014 through 2017 if property tax rates remain the same.
| Potential shortfalls | |
| Fiscal 2014 | $246 million |
| Fiscal 2015 | $311 million |
| Fiscal 2016 | $395 million |
| Fiscal 2017 | $440 million |
| Total | $1.4 billion |
| Source: Commission on State Debt | |
The projections do not include bond premiums because those figures are too volatile. With the bond premiums, the shortfalls likely would shrink.
Unless property assessments increase, though, officials will have to raise taxes or take away money from core services to cover state borrowing.
Under former Republican Gov. Robert Ehrlich, the property tax rate was 13 cents per $100 of assessed value, a rate that Treasurer Nancy Kopp said the board may have to weigh in future years.
Such a move would come with significant political cost for Democratic Gov. Martin O’Malley, who railed against his predecessor for backing such an increase.
The potential shortfalls weren’t the sole dose of cold fiscal reality pondered by the Maryland leaders on Wednesday
Thanks to the state’s unresolved budget situation, Moody’s Investor Services officials told Kopp they are keeping a watchful eye on how lawmakers ultimately fund services for next fiscal year. A downgrade in the state’s credit rating would make it more expensive for Maryland to borrow money.
“There’s a lot of denial right now, denial that the legislature really did this, denial that these cuts have the effects that they will have,” O’Malley said of the budget turmoil.
The governor has said he would like to call a special session so lawmakers can pass an alternative to a so-called “doomsday” budget that would go into effect if the General Assembly does not reconvene. However, the House of Delegates and Senate have yet to agree on terms for such a meeting, and O’Malley said he would not call the lawmakers back to work without a concrete blueprint from both sides.
