Montgomery County's property values have dropped $10 billion since fiscal 2011, leading county leaders to raise taxes and cut services to cover the huge shortfall.
The plunge is "unprecedented," even in previous recessions, said County Council Staff Director Steve Farber, who has been reviewing the forecasts for an April 17 council meeting.
"It's really quite astounding."
|Fiscal 2011||$167.8 billion|
|Fiscal 2012||$161.8 billion|
|Fiscal 2013||$157.1 billion|
|Source: Montgomery County Department of Finance|
Taxable property values are projected to fall to $157.1 billion in fiscal 2013 from $167.8 billion in fiscal 2011, according to an analysis by county Department of Finance Chief Economist David Platt. Property taxes make up the largest chunk of the county's revenue, at 30 percent.
The drop is why County Executive Ike Leggett proposed a 4.5 cent increase in the property tax rate -- after last year's 4.2 cent increase -- as well as keeping energy taxes at a level that was supposed to be reduced July 1.
With values dropping so much, the county would need to raise the tax rate by 6.1 cents on $1,000 of assessable property value to earn the same share of revenue from property taxes, Farber said. Instead, Leggett recommended extending the county's energy tax increase.
"I don't think you have any choice," said Councilman Marc Elrich, D-at large. [Without doing so] that would mean massive cuts in services. That would be a really bad outcome. Nobody wants to raise taxes, but it's the box we're in."
Leggett acknowledged that the drop in assessments was the primary factor in his pushing for the extension of higher energy taxes and a steeper property tax rate.
"Most people don't understand the rates at all; they know what they pay; that's the number that people care about," Leggett said of property taxes.
Prince George's County also has been hit by plummeting property values: its assessable tax base has dropped $20 billion from $96 billion to an estimated $76 billion in fiscal 2013.
"For us, that's one of the main reasons why we've been struggling over the last couple of years," said Tom Himler, the county's deputy chief administrative officer for budget, finance and administration.
Two factors are causing the drops -- the recession and Maryland's assessment process, said Stephen Fuller, director of George Mason University's Center for Regional Analysis.
"Housing stock in suburban Maryland broadly -- but Montgomery County is the best of that -- is still losing value," he said.
Maryland assesses one-third of its properties each year, which is causing those values to drop long after those elsewhere have begun to rebound, Fuller said. Although property values fell a couple of years ago, some houses were not reassessed until fiscal 2011 and fiscal 2012, so the county did not account for the drop until recently.
The three-year cycle also will hinder the county's recovery. Even if property values climb next year, two-thirds of the county's houses will not be reassessed until fiscal 2014 and 2015.
As a result, the county's taxable base is not expected to reach fiscal 2011 levels again until fiscal 2016.
"Those double-digit growth rates that we were seeing [in 2003 and 2004] -- in fact heroic growth rates ... We don't anticipate seeing home prices going up like that in the near future," Platt said.
Brian Hughes and Ben Giles contributed to this report.