A printing error is causing state officials to scramble to make sure local governments can collect all the property taxes they need to fund schools, police and other services in their budgets.
More than 100,000 Maryland property owners did not receive written notices of their new estimated home values by a Jan. 30 deadline, an error that if left unaddressed could have major ripple effects on county budgets. Fixing the problem is likely to fall to state lawmakers, who would need to temporarily adjust the deadline.
“There’s still ample time for the General Assembly to fix this,” said Richard Madaleno, the chief administrative officer for Montgomery County, one of scores of local government officials who has been trying to make sense of the problem.
What happened?
One of the main ways local governments get money is through property taxes, and those taxes are based on values that the State Department of Assessments and Taxation assigns.
The assessed value is not necessarily the same as the market value or potential sale price of a home.
Each year, one-third of the state’s 2.2 million properties are reviewed and given a value for tax purposes. A state website is updated, the data is sent to government budget offices and a letter is mailed to property owners by Jan. 30.
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This year, a vendor that prints and mails the letters had an error in its process that resulted in about 107,000 of those notices not being sent, according to a statement from Michael Higgs, director of the Department of Assessments and Taxation.
The vendor “has since resolved the error and the missed recipients will receive notices in the coming weeks,” Higgs said in the statement.
Why is this a problem?
Baltimore City and the state’s 23 counties levy property taxes on the assessed value of properties. But property owners need to be given time to review the value and appeal it if they think it’s too high or too low.
County officials believe, if notices aren’t sent in time, local governments can’t use the new — usually higher — values when charging property taxes, which make up a major portion of their budgets.
That could mean counties would miss out on millions of dollars they’d otherwise collect.
Michael Sanderson, executive director of the Maryland Association of Counties, said he understands the law to be: “If you don’t provide the notice in timely fashion to people, that means their property doesn’t change in value. For tax purposes, the value sits still.”
Less money collected in property taxes means less money for all the services county governments provide.
How big is the problem?
The full scope is unclear.
SDAT did not respond to questions about where the properties are located.
It’s also not clear how much property tax money could be at risk, according to county officials who spoke to The Banner.
Sanderson said the impact could be in the tens of millions of dollars, but he hadn’t been briefed on the matter by state officials.
The website Maryland Matters, which first reported the mailing problem, pegged the potential impact at $250 million over three years across all counties but did not cite a source for that estimate.
County officials said they’re optimistic a fix will be forthcoming so that, in the end, they won’t miss out on any property tax money.
How will it be fixed?
Higgs, the head of the State Department of Assessments and Taxation, said his team is working “in partnership with the General Assembly to draft legislation that will enable a temporary timeline adjustment to distribute the reassessment notices.”
The statement continued: “The legislation will ensure that the State reassessment can be completed fairly and accurately and that all appropriate revenues are collected. Every account in this group will receive a notice in the coming weeks and will be provided with the full 45-day timeframe for appealing the reassessment.”
The General Assembly is nearly halfway through its annual 90-day legislative session in Annapolis, past the standard deadlines for introducing bills. Late-filed bills face additional procedural hurdles, but those would be easily overcome for a high-priority issue. Another option is to revise an existing bill to include the temporary timeline change.
State lawmakers are in session until April 8. Baltimore and the counties set their own budgets later in the spring, and they mail property tax bills in the summer that are due in the fall.
“This news is alarming, but we are thankful that legislative leaders have already signaled their intentions to take swift action on this issue,” Baltimore County Executive Johnny Olszewski Jr. said in a statement.
Olszewski, who is president of the counties association, added: “It’s critical we ensure local jurisdictions receive their fair share of revenues so that we can remain focused on delivering the core services that our shared residents rely on and expect.”
Howard County Executive Calvin Ball struck a similar tone in a statement: “This is a deeply concerning issue for local jurisdictions across the state. It’s important for these assessments to be accurate so that everyone is paying their fair value. Howard County will continue to work with the State to understand the full scope. I look forward to continuous conversations to effectively address this issue at the State level.”
Baltimore Banner reporter Jess Nocera contributed to this article.
