As Montgomery County considers its property tax rate for the coming year, it is again going through an annual state-mandated process of advertising the possibility of a tax increase.
The state requires jurisdictions to buy advertising space in local publications to state their expected revenues and what tax rate they would need to set so that tax bills do not increase.
The concept is known as a “constant yield” tax rate — what would generate the same level of revenue from one year to the next. When property assessments rise, the property tax rate would need to drop to keep revenue at the same level. Government bodies, however, do not lower their rate to have a constant yield of revenue each year.
A required legal notice published recently in The Washington Post, in a format and wording mandated by law, says the “County Council of Montgomery County proposes to increase real property taxes.”
But the legal notice and the wording in it can cause confusion between revenue and rates, County Council President Tom Hucker said in a phone interview Wednesday night.
He said the state needs to change the requirement for the notice.
“I am convinced that there will be no property tax increase in Montgomery County this year,” he said, referring to the rate. “I hope our state legislators one day change this artifact of state law that requires this confusing hearing.”
The county’s current real property tax rate is at 69.48 cents per $100 of assessed value. If that rate stays the same for the next fiscal year, real property tax revenues would increase by 1.3%, meaning roughly $18 million more.
According to the ad, the real property tax rate would be decreased to 68.59 cents to fully offset increasing assessments.
In his recommended $6 billion operating budget for fiscal year 2022, County Executive Marc Elrich proposed a real property tax rate of 71.80 cents per $100 of assessed value, which would generate $64.7 million in additional property tax revenues.
But the weighted average of the real property tax rate and other property taxes is proposed to stay the same at the current 97.85 cents per $100 of assessed value.
The next fiscal year begins on July 1.
The other property taxes included in the weighted average rate include taxes for fire, transit, and parks and planning services.
Council members have previously said that the “constant yield” legal ads are confusing and outdated requirements in state law that cause the public to falsely assume what the council is doing.
If a jurisdiction does not choose a constant-yield tax rate, it must advertise a proposed tax increase.
In April 2020, Rich Madaleno, who was the county’s budget director at the time and is now chief administration officer, said the county’s finance officer hadn’t received questions or concerns about the constant yield advertisement for years.
Last year, though, the finance department had a handful of calls about the constant yield, possibly because of a change in how the tax yield is advertised.
The advertisement was placed in small local publications in years past. Last year was the first year that it was published in The Washington Post because of a lack of local publications. The Gazette, a chain of weekly papers with countywide reach, folded in 2015.
Briana Adhikusuma can be reached at firstname.lastname@example.org.