A Montgomery County Council committee took a preliminary vote Thursday to maintain the county’s property tax credit at $692 for owner-occupied residences, saying it was important to keep County Executive Marc Elrich’s campaign pledge not to raise property taxes.
Homeowners who are permanent residents in their homes are eligible for the property tax credit each year, as a measure of shifting the tax burden to commercial and rental properties.
The credit has been set at $692 since fiscal 2011, and Elrich proposed maintaining that rate for fiscal 2020. Elrich has proposed a property tax rate of 98 cents per $100 of property, which is unchanged from last year’s.
Council staff had recommended increasing the tax credit to $800, which would account for inflation that has occurred in the last eight years, as well as help property owners who have seen their assessments rise.
According to a memo from Legislative Analyst Jacob Sesker, the property tax base in the county is expected to be $197.6 billion in fiscal 2020 — an increase of 3.6% from the current fiscal year.
The “break even point” in which a homeowner would no longer benefit from the higher tax credit would be between $800,000 and $850,000 of assessed property value, according to Sesker. The median sales price of a home in Montgomery County was $575,000 in March, according to the Greater Capital Area Association of Realtors.
Raising the credit to $800 would generate $1.7 million in additional county revenue, according to the memo, but in order to offset increased costs incurred by the credit and keep revenue at a limit set in the county’s charter, the property tax rate would need to be increased by 1.34 cents.
Committee members Nancy Navarro, Sidney Katz and Andrew Friedson all expressed support for maintaining the current credit to keep Elrich’s promise of not raising taxes.
Sesker also warned during a hearing Thursday that a tax credit increase would shift the burden more to rental properties which could lead to rent increases for tenants.
“This effectively would be a tax increase, and we also need to be mindful that are renters are growing, and this would have some impact on our renter population,” Friedson said.
Katz said he was worried about the effect increasing the property tax rate would have on businesses.
“This is at a time when our economic development, to say it as nice as we can, is not good,” he said.
Katz added that he was worried that seniors whose houses had appreciated in value could face steep property tax bills, and also make it difficult to sell their homes. He said he is also worried about the increases in rent that tenants could face.
Also present at Thursday’s hearing was council member Will Jawando, who is not on the committee, but wanted to voice his support for increasing the tax credit.
Jawando wrote in a memo to the committee that he favored increasing the credit to $771, arguing that doing so would help middle-class families.
“Increasing the credit will make our tax code more progressive by providing the largest relative benefit to taxpayers with homes at or below the median assessed value,” he wrote.
The full council is scheduled to approve a version of Elrich’s proposed $5.7 billion budget on May 23.
Dan Schere can be reached at Daniel.schere@moco360.media
