Are Citizens Getting a Tax Cut or Will They Fork Over More? Newspaper Is Confused

Taxes are capturing the headlines right now as local government boards across Cecil consider the levy they are going to place on citizens for the upcoming fiscal year. This subject, which is associated with the constant yield rate, the amount that produces that same tax burden as last year, is confusing a lot of people, including the writers at the Cecil Whig.  On the day the county made its preliminary decision to consider a 4.8% tax increase, the daily paper wrote that the commissioners were proposing a “property tax cut,” while the board issued a statement saying it was raising property taxes!

What confused the reporters and lots of other people is the constant yield rate law. Because Maryland reassesses properties on a three year cycle, property valuations continually increase. To keep things in check, Maryland determines the rate (constant yield) that would produce the same burden before the assessment increased.  It then requires jurisdictions to hold public hearings if they are going to maintain the old rate, which now has an inflated value because the property valuation went up. It is a good system, but as we see it confuse a lot people.

County Increases Amount of Taxes Citizens Will Pay by 4.8%

What the county did was decide to not take the full increase as the commissioners explained in a press release: “If Cecil County maintains the current tax rate of $ 0.96 per $ 100 of assessment, real property tax revenues will increase by 7.0 % resulting in $ 6,188,086 of new real property tax revenues.” With the county considering not reducing its property tax rate enough to fully offset increasing assessments, the state requires it to inform the public of the increase. Thus officials said: “The County proposes to adopt a real property tax rate of $ 0.940 per $ 100 of assessment. This tax rate is 4.8 % higher than the constant yield tax rate and will generate $ 4,225,789 in additional property tax revenues.”

Elkton Keeps Taxes the Same

In Elkton the town board voted to hold the line on taxes.  It adjusted its rate so citizens in the county seat will fork over the same amount of cash they did previously.  To their credit, they did exactly the same thing last year, keeping a rate that held the amount of taxes individuals had to fork over the same.  Last year the county took the full increase, an amount that equaled 10% for citizens.

One other complexity in understanding this is how property is valued. Maryland assesses real estate on a three year cycle so that in any year there’s a 33% probability that the value of your property increased. In these challenging economic times when home values have declined, many are asking why assessments are going up when values are down. An insightful front page article by Lisa Tome editor of the Herald, the county’s weekly newspaper, answered that question, explaining why taxes are going up on homes around Cecil County while the property is worth less. According to the Herald, “assessments will be up by about seven percent beginning July 1. . . .” Over a three year period the increase will average out to about 6% a year.

We’ve reviewed the Herald article to see if that editor was getting it right.  After that examination, we recommend that piece of reporting for it is accurately presented and written in an understandable style. We recommend you check out the edition of May 5, 2009.  The Herald does an outstanding job in explaining matters, as we’ve mentioned before.  Thanks Lisa for some great reporting.

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9 responses to “Are Citizens Getting a Tax Cut or Will They Fork Over More? Newspaper Is Confused

  1. David Healey

    Thank you to Someonenoticed for clarifying this important issue. This was an outstanding explanation of how the constant yield rate works. No one likes tax increases, but it’s hard to see how else the county government can continue to provide essential services in these times without raising revenue.

  2. People also do not understand that state law limits the amount of the property tax Assessment– that means the property’s value on which taxes are based– that can be increased. So if you have lived in your home a long time, you are still paying taxes on a much lower amount than the property is really worth, even in today’s real estate market. It is unrealistic to expect the county to deliver services to more people at the same price. But a few people are playing teabag games on all this for their own political advantage.

  3. Louise:

    That’s right, that is yet another complexity to understanding the matter of the property tax assessments. A tax cap is in place so that if your assessment went up significantly (as it did for many when values were soaring), the amount that can be taxed is capped. Then the increases are averaged out over several years so the impact isn’t as difficult on an individual, but in time it averages out. The Herald made an attempt at explaning that too. I also talked with the state director of assessments about that complexity and he says that everyone will be caught up in a couple of years and then if the property values stay depressed, assessments will start a downward trend. It’s just a matter of time averaging, designed to protect citizens so there aren’t wild fluctuations.

    Here’s the larger point than these technicalities for me. Whatever one thinks about the public policy associated with the annual levy for services (keep it flat, add a percentage to just keep up, or increase it), it is critical that accurate reporting be done on this important subject. Citizens need to be accurately informed so that, whatever their opinions, they can properly react to such important policies.

    The county had it right in its press release, but the Whig headlined it as a tax decrease. Also the numbers in the story were significantly off. If I’m using the daily newspaper to keep me informed on what my local government is doing, I’m going to be in trouble, unless there are alternative news streams. Today one can simply go to the county site to get the accurate numbes and information.

    While there is some complexity in this arrangement that Maryland uses, it really is a good system, all designed to provide checks and balances and public input. Now if legacy media could get it right so those 11,000 subscribers know what’s going on, it would help. Then we’ll see how and informed public policy debate takes place!

  4. Louise

    I’d appreciate you thoughts on my little commentary that follows: (It’s coming out of my last comment post.)

    I’m always amazed at how these headline stories that are handed to the daily and would help newspapers fly off the newsstand aren’t picked up on. There’s another situation in Elkton right now where a citizen filed an Ethics Complaint against one of the commissioners. At their monthly meeting (Two months ago), he came in and asked where it stood. No offical seemed to know. This month he came in again and asked and got an answer to which he said that’s what you said last month. (Essentially nothing had been done.) Now whether the complaint is valid or not, I don’t know, but on a small town beat an ethics complaint from a responsible citizen is an important news story. Yet the only place the story has appeared is on this blog (as a straight forward newspiece) and in fact I see from reviewing the approved town meetings from the April meeting, the citizens inquiry isn’t noted so, I guess, according to the offical recordation of the minutes it didn’t take place! These things that are handed to your are good for circulation. Just report them and if the record is cleared report that too.

  5. On the tax issue, a problem is that some people confuse ‘taxes’ with ‘tax rates’ and use the two words as though they are the same thing. They are not. It is absolutely accurate to say the county commissioners cut the tax RATE by 2 cents. (They also cut the RATE by 2 cents last year, I believe.) The actual tax bill a person receives depends on different facts: were they re-assessed recently, did they appeal their assessment (which people can do each year if neighborhood values have dropped). I don’t think anyone, newspaper or not, can say as a fact that an individual’s TAXES will go up or down or stay the same. And I disagree with the claim that the state government-set property values all even out over a 3 year phase in period. The phase in for a house that is not your principal residence will fully phase in in 3 years. But I have researched my neighborhood extensiviely and for long time property owners whose house is their principal residence, the values at phase-in are still much lower than what they are worth or values of nearby properties that sold recently. ( will respond later on ethics issue. pressed for time now.)

  6. Louise, the subject of tax rate and tax cut definitely confused the Whig and created the wrong impression for those reading the headine in the above the fold article that day. (Whatever happened to the old idea of pitching a headline to move those papers.)

    Cecil Whig Headline: “County proposes property tax cut” Since that time and since that story contradicted what the county press release was saying, they’ve become a little more careful in reporting the subject. Seems they mixed up taxes with the tax rate.

    On the develoment of the assessments, you’re right it is a very complex process and will vary from review to review, but generally these are the key elements of the system. Of course, there are volumes of regulations to support this entire process and interpretations that go with it, so there’s enormous complexity.

    BTW, it is generally a good system and the constant yield was designed to make it as clear as possible to the public on whether the taxes were going to be constant. Now if the paper could get it straight, though as I’ve mentioned later reports have been more careful done. Notice when you read that first report the great difference in the numbers between the county’s press release and what was reported in the daily. It was just eaiser to go to the county web site and read the official statement. Then I had the right info, to make my own jugements based on what was really being done.

    I think we all want people to be reasonably informed and then the debate can begin on public policy.

  7. Can’t none of you web people figure it out. If. You got to pay more its a tax increase. That Simple. Tell Hodge that will you. he promised no tax increase

  8. Hey in the Whig this morning the man in charge of the county money said its a tax increase. At least he knows what he talks about and is telling the people straight. Now if this whig paper could get is right and not try to confuse people for them officials, it wouild help.

  9. George

    Actually the county has a really competent administration, including the Finance Officer, Craig Whiteford. You can depend on what he says being accurate and clear. When I’m not sure if the Whig has something correct, I’ll surf over the county site to check out the press release and his statement. That’ll clear up the matter for me. Notice that he always called it a tax increase. It was the Whig that called it a tax cut, though they’ve mitigated that recently.

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