Drop In Home Values Raises Debate About Tax Notices

Lower assessments mean rates can go up without public knowing it

Harford County Executive David Craig is loathe to raise taxes, but he and other local government officials are particularly miffed about a state requirement that they publish notice of property tax increases even if rising assessments are to blame.
 
But in a new twist, plummeting real estate assessments could for the first time allow cash-strapped jurisdictions to raise tax rates without providing that notice. Most homeowners would not see a significant change to their tax bill, because the higher rate would be offset by the lower property assessment.
 
Since 1977, counties have been required to notify taxpayers and conduct a public hearing before setting a property tax rate higher than that which would render the same revenue as the year before, known as the "constant yield" rate.
 
Because property assessments typically grow in value, constant yield rates historically have been lower than the previous year's actual tax rate. Often, counties will leave their property tax rate unchanged but have to give notice that they are proposing to "raise" taxes because assessments and projected revenue have increased.
 
The requirement was written at a time "when no one contemplated that housing prices would fall dramatically," Howard County Executive Ken Ulman said.

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