Montgomery County Council members hinted Monday that they are likely to approve two tax increases this month.
During discussions about the schools budget, council member Roger Berliner said the council was prepared to do three things he described as “unprecedented” during his time on the council—raise property taxes, increase the recordation tax rate and fund the Montgomery County Public Schools budget by $90 million over the maintenance of effort level required under state law.
“This is an education first budget,” Berliner said, adding that the county’s budget proposal funds the construction needs of the school system as well as its operating budget request.
The council is scheduled to discuss options for a property tax increase Wednesday and also take an initial vote on raising the recordation tax, which is applied to home sales and mortgage refinances in the county.
Council President Nancy Floreen said Berliner was predicting “fairly accurately” how she thinks the council will vote on the proposed tax increases. She said that in order to fully fund the school system’s proposed $1.73 billion six-year capital improvement budget and $2.45 billion fiscal 2017 operating budget the council will likely have to approve a 6 percent to 9 percent property tax increase as well as a “pretty significant” increase in the recordation tax.
Floreen noted the increase in the property tax will require a vote by all nine council members in order to raise the rate over the charter limit. The charter limit requirement was put in place after voters approved a 2008 referendum initiated by Republican activist Robin Ficker that requires the entire council to approve any property tax increase above the rate of inflation and growth in assessed home values.
Council members are working Tuesday and Wednesday to determine what the final property tax increase would be and plan to discuss the proposal during two meetings Wednesday and Thursday, according to Neil Greenberger, a council spokesman. The property tax increase will likely be needed to fund the final $5.2 billion-plus county operating fiscal 2017 budget.
The proposed increase in the recordation tax, which is paid based on how much a home sells for in the county, will pay for the council’s plan to fund the school system’s six-year capital budget, according to council member Hans Riemer. The increase in the recordation tax would erase an approximately $160 million difference between the capital budget proposals of County Executive Ike Leggett and the Board of Education.
“I think that needs to be super clear,” Riemer said Tuesday. “You couldn’t do this without the recordation tax increase.”
The recordation tax increase is expected to generate $185 million in additional revenue over the next six years, with $125 million of that going to school construction projects and the rest targeted for affordable housing and other capital projects. The tax increase has been opposed by local real estate agents, who have said paying it will make it more difficult for first-time buyers to purchase a home and that it may have an overall negative effect on the county’s real estate market.
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