June 18, 2020 – On a 3-2 vote, the Howard County Council defeated a recordation tax increase that would have jumped the county’s rate higher than any regional competitor. 

Council Resolution 85-2020 would have replaced the current flat rate of $5.00 per $1,000 of value with a stepped tax structure that would have imposed a tax of $21 per $1,000 on instruments valued at $1 million or more.  A proposed increase in the transfer tax to fund school construction was approved at 0.25% versus the 0.5% authorized by the General Assembly.

Proponents of the resolution argued it was a progressive approach that would make high-income households and businesses pay more and relieve the tax burden on low- and middle-income households.  In fact, six of the eight largest commercial transactions and 39% of total dollar volume in 2019 were multifamily sales that would have been forced to pay an additional $7.4 million in tax.  Another $96 million in land transfers made in the process of land development would also have been taxed at the highest rate.  The tax would stack up as many of these parcels would eventually be subdivided and sold to homeowners who would pay recordation tax again at final sale.

Even before the COVID-19 crisis, Howard County was facing a serious fiscal situation.  As the residential tax base struggled to recover from the last recession, rising commercial assessments and real estate taxes cushioned county budgets.  In recent years, several external factors and policy decisions taken by the county slowed revenue growth to rates below demands for increased programmatic spending.  In March of 2020, prior to COVID-19, The Howard County Spending Affordability Advisory Committee FY 2021 report called for fiscal caution and prudence, identified a current funding gap of $74 million and warned that the county’s structural budget deficit would reach $308 million annually by 2026.