“As the St. Mary’s County Commissioners transition from an impact fee to a much larger excise tax, and debate raising property taxes, they should consider the ramifications such tax increases will have on their constituents.
The commissioners are currently mulling a roughly 367% increase to what will be a newly established excise tax, and a 3.5% increase in property tax revenues collected by deviating from the constant yield tax rate. While the two are not directly related, these taxes on real estate development and homeowners will have a chilling effect on the local economy.
These additional taxes will be transferred directly to buyers, placing the American Dream out of reach for more people. At a time of economic strain and inflation, the residents of St. Mary’s will feel the pain of these tax increases.
The Southern Maryland Association of REALTORS® would request that the commissioners consider acting on several items.
We would ask that the commissioners maintain the proposed constant yield tax rate of $.8023. Constant yield is designed to offset the tax burden when property assessments see large jumps as we have seen over the past year.
The county should remain revenue neutral as the county transitions from an impact fee to an excise tax. Raising the excise tax will create more difficulty for homebuyers to afford a place to live and will disincentivize development in the county. Encouraging people to build smaller homes for a smaller one-time up-front fee will harm the county’s potentially taxable base over the life of the home.
The county should consider strategies to mitigate any harm caused by the excise tax and minimize any collection of an excise tax on non-residential development. Several other jurisdictions have found success in allowing the cost of a development excise tax to distribute over a certain period, such as 10 years. We would also ask the commissioners to exclude collecting any excise taxes on major home renovations. We would further recommend removing any excise tax on industrial or office space, specifically if it would further the goals of St. Mary’s County Economic Development (SMCED). The commissioners should work with SMCED to develop an exemption to the non-residential excise tax for a business if the development helps expand one of the county’s targeted industries.
The state of Maryland, like much of the country, is currently facing an unprecedented housing shortage. A survey by American Strategies earlier this year found that 76% of Maryland voters think the cost to buy a home in Maryland is too high, and almost one out of every three people would consider leaving the state due to high housing costs.
This is a shortage that experts across the world have been trying to develop policies on for years. However, it doesn’t take an expert to know that these higher taxes will make it more difficult for people to purchase homes.
We understand that it is expensive to maintain growing public facilities. Many people look to St. Mary’s County now to find a safe, pleasant, and expanding community. We don’t want to see that change.
We want to see the county grow smartly and responsibly, but large tax increases will stand in the way of that.
Michael Funk, The author is the President of the Southern Maryland Association of REALTORS®”
