The tax calculation

It’s a handy-dandy way to figure out just how much more the county will take out of your pocket.

On Thursday Wicomico County Executive Rick Pollitt announced through his spokesman Jim Fineran that county property owners now have a calculator to figure out how much more they’ll pay in property taxes next year.

In presenting the proposed Fiscal Year 2012 Budget to the Wicomico County Council on April 19th, County Executive Richard M. Pollitt, Jr., promised that a “tax calculator” to measure the suggested nickel tax increase would be on the county website “as soon as possible.” Mr. Pollitt announced today that, “It is up and running.”

The Wicomico County website is On the homepage, there is a column on the right called “What’s New?” At the top of that column is a link titled “Proposed Tax Rate Comparison Calculator.” Users are advised to click on that link to go to the calculator.

There are two steps. If you do not know your most recent assessment value, the first is a link to the State of Maryland Real Property Database where users can access that information. County officials urge users to follow the directions carefully when they reach the link. The second is the calculator. Users may simply enter their assessment value, click on “calculate” and the device will provide specific numbers of the impact of the proposed nickel increase on the user.

In announcing the calculator, Mr. Pollitt said that, “I want to take the guess work out of this for our tax payers. I have proposed a nickel tax increase to maintain vital county services. I want the property owner to know exactly how much this is going to cost.”

The calculator does not take into effect changes in assessment from year-to-year or effects of the Homestead Credit. It is intended merely to define the effect of a nickel tax increase.

Actually, I can do the math pretty easily – for every $10,000 your property is worth, it’s going to cost you an extra $5. Someone with a modest $100,000 house will be on the hook for an extra $50, while a residence in Nithsdale or Tony Tank might see a $200 per year jump.

But, more importantly, the key question is where the extra money would be going. Pollitt claims that we’re just staying in place because assessed value in the county dropped by $300 million from last year to this year. Obviously those who were reassessed this year saw a decline of up to 1/3 in their rates, so a nickel increase may not necessarily hurt them but instead just cut into their savings.

(For example, a house assessed at $150,000 under the old rate would pay $1,138.50 in taxes, but dropping the assessment to $100,000 at the new rate makes the taxation $809.00. That’s over $300 in the homeowner’s pocket despite the increase.)

But those who didn’t get the benefit of the changes yet will have to bear the increase described above. And the increase stayed ahead of what would be considered constant yield, which is a departure from Pollitt’s previous practices. Of the five-cent increase, about 3.8 cents is constant yield while the other 1.2 cents is allowed under the revenue cap – and thank goodness for that, because otherwise we could have seen rates go up a full dime or 15 cents per hundred dollars of valuation.

Pollitt also promises to change the homestead exemption from 10 percent to zero, beginning next fiscal year. Of course, I’m not sure if that enables the tax paid to go down if an assessment is lower. Since those who were last assessed in 2009, just before the bottom really dropped out of the local housing maket, have their turn next year, will that affect them adversely? And how much more will Pollitt raise rates next year to make up for the change in homestead exemption? These questions won’t be addressed in this year’s budget – unlike the federal government, we don’t make long-term projections.

Yet if you look at the new operating budget, the largest increases seem to be in the personnel benefits, along with $200,000 devoted to a ‘time and motion study’ in the ‘Administration/Executive Function’ budget. Even without that, the executive branch didn’t suffer the cuts much of the remaining budget was forced to endure.

According to Pollitt’s budget guide, each penny in property tax brings in roughly $750,000. So in order to simply maintain the constant yield rate increase of 3.8 cents per $100 of assessed value, the County Council would have to shave about $1 million from the budget. It’s probably doable, but look for everyone potentially affected to scream bloody murder when the public hearing is held. Out of a budget of a little over $110 million, we’re actually talking about less than 1 percent cuts.

But, as I mentioned, cuts are just fine when they come out of someone else’s hide. Look for the victim card to be played early and often over the next couple months. In the end, the victims may be those homeowners who haven’t seen their assessments retreat downward to reflect the market just yet.

Maybe that will make you choke on your Easter ham, but it’s an upcoming fight we need to gird for.

Update: I wrote this last night, before Greg Latshaw at the Daily Times had his take.

Author: Michael

It's me from my laptop computer.

2 thoughts on “The tax calculation”

  1. I love how politicians always claim their taxes are “nickel taxes” or “dime a drink taxes.” Are they really so divorced from reality? You can call it a nickel tax if it really costs everyone a nickel. Otherwise, call it by the percentage it is, because that’s really the only way to be accurate.

  2. With my roughly 8 million dollars in real estate portfolio, this mess is going to cost the Albero household a bunch. I don’t know exactly how much – that’s what I pay my accountants to do.

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