Chapter 13 – It seems ironic for an industry that has consistently lobbied the county government for policies that allow sprawl development to moan about higher taxes. But that’s exactly what happened during the County Commissioners’ budget hearing on June 24 about a proposal to increase the county’s real estate transfer tax.
It is well understood that residential development (mostly what we have in Charles County) doesn’t pay its way. Various case studies place the deficit as high as $1.65 in costs for every $1.00 recovered in tax revenue.
Even in places dedicated to more progressive growth policies, it is rare to get a net positive return from residential development. Conversely, in places like Charles County, where sprawl policies have flourished for decades, the deficit can be significant and rests solidly on the backs of existing homeowners. No wonder our property tax rate is higher than any other county in Maryland.
Unfortunately, the development lobby has opposed smarter growth planning in favor of the inefficient sprawl policies it relies on for sales commissions and profit margins. It’s like a Ponzi Scheme – new tax revenue from houses that don’t pay their way is used to pay down an ever increasing deficit to which the new houses are now contributing.
In bad times, assessments drop along with property values and a glut of new homes compete with older homes to further lower their values, but someone still has to pay for all those residential services. Homeowners then face the threat of losing value in the largest investment they may ever make, but they still have to pay a share of the deficit.
If higher taxes are going to keep people from buying homes in Charles County, having the highest property tax rate of any county in Maryland is probably a more likely deterrent than a slight increase in the transfer tax. Property tax bills are forever – transfer taxes only happen when property is transferred.
In the long run, sprawl is the enemy we need to defeat and it’s time for Charles County’s development lobby to decide whether it wants to be part of the solution or continue being a self-serving cause of the problem.
Read more from our ongoing series, “Charles County’s Comprehensive Plan fiasco.”