A bill to repeal Harford County’s impact fee created some strange bedfellows when it was first introduced by Dion Guthrie, a Democrat representing Edgewood and Joppatowne and Chad Shrodes, a Republican representing the rural north.
Now, the repeal effort has sparked a rift among the leaders of the anti-tax Tea Party movement and drawn a number of local organizations into the fray. The bill is scheduled for what may become a lively hearing October 20th (today) at 7 p.m. in the County Council Chambers at 212 S. Bond Street in Bel Air.
The impact fee offsets the impact of new household creation on the cost of public schools by dedicating revenue specifically to public school construction needs.
Bel Air Tea Party organizer Tony Passaro would be expected to join other anti-tax advocates and support the repeal, but he sent a recent email to the members of the Harford County Council in which he acknowledges that “some taxes have merit.” Passaro blames, among other things, “voodoo math and misleading diatribes” for the drive to eliminate the fee and argues instead for reform.
The impact fee is collected from new home developers up front, when permits are issued, but Passaro asks the county council to “figure out a way to delay the fee” until a new home is sold, thereby freeing up funds for developers. He also suggests that farmers be given an exemption from the impact fee for family conveyances.
The debate over the impact fee also has community organizations lining up on one side or the other.
Opposing the repeal are the Harford County Board of Education, the Harford County Education Association, the Harford County Council of PTAs and the Friends of Harford. All are expected to send representatives to attend the hearing Tuesday.
Those in favor of the repeal, including the Rt. 40 Republican Club, and Pat McGrady, an anti-tax organizer and candidate for the Maryland House of Delegates, have planned a “Tax Repeal Rally” outside the Council Chambers at 6 p.m. just prior to the hearing.
Anyone wishing to speak at the 7 p.m. hearing is encouraged to look for the green sign-up sheets at the door for Bill No. 09-29 – Public School Development Impact Fee and to arrive early. Doors will open at approximately 5:30 p.m.
Here is the full text of Tony Passaro’s e-mail to the County Council, which was also sent to County Executive David Craig. A copy was also made available to The Dagger:
Dear Members of the Harford County Council,
Thank you for taking the time to read this memorandum. Should you wish it, I will be happy to discuss this issue with each and every member of the Council in person.
Throwing the Baby out With the Bathwater
In this case, the baby is the Impact Fee. In our headlong rush to cut taxes and starve government we are overlooking the fact that some taxes have merit.
Unfortunately the Impact Fee has been become politicized and demonized and made the “bad tax” by the use of erroneous statements, voodoo math and misleading diatribes. All for no other reason but that it is politically expedient. People are emotional about it and this lends itself nicely to political rhetoric. Political expedience, not good sense is driving the repeal agenda. What I am suggesting is that it is wiser to REFORM the Impact Fee not eliminate it….
The view that the County Government is in an adversarial relationship with it’s constituents is totally off base and needs to be corrected. Sound, sensible Government does not come from fighting with your local Government, especially one that has made strides to be collaborative….
As a Citizen, I strongly support working in a collaborative, not adversarial relationship with our County Government. To do otherwise is to fly in the face of sound government and invariably preclude satisfactory results.
I have read that we “will no longer build Schools”, “Cecil County does not have it”, “it is unfair”, “home building is being stopped”, “it does not generate enough revenue to matter”, and the like.
What the Impact Fee does is cause the “New People” moving into our community, not the ones already here to pay their fair share of new School Construction. This is based on the assumption that new people into a community UNFAIRLY burden the existing tax payers by needing additional new schools. What the Impact Fee does is place part of the cost of this new building on the new people who need it, not the ones already living there who have paid for their existing schools.
What the Impact Fee does for the Tax Payers: It pays for the construction of the best new schools that money can buy. With both the existing Tax Payers and the New Tax Payers bearing part of the burden. The Fee itself will only cover part of the new school construction costs…..the existing tax payers are still bearing some of that cost..
BRAC is, if you believe the reports, is bringing 20,000 new jobs into the County. Let’s discount that to 5,000 additional children. These will require the construction of 2 to 3 new schools, each with a price tag of 80 to 90 million dollars. Without the Impact tax, the entire cost of these new schools will fall on the existing tax payers and I do not think it is fair. With the Impact Fee $43,000,000 falls on the new households. Without the Impact Fee, that $43,000,000 would fall on the shoulders of the existing tax payers. Now, what is so fair about that??
CECIL County utilizes an Excise Tax to help cover its new construction costs.
This tax affects every tax payer in Cecil County, new and existing alike. They wish they had an Impact Fee and are working to get one.
What is worse, The EXCISE TAX is not tax deductable on your Federal Tax Return while the Impact Fee, as part of the cost of a home is.
My hope is that Our Reform Measure serves as a model for the rest of the counties in the state that are struggling to make the Impact Fee work for them…..
As for the Builders, they are out of sorts because they are forced to pay the Impact Fee before they start building. This ties up scarce funds, for as long as 18 months. In a cash tight market not very desirable.
We can readily solve this issue by moving the payment of the Impact Fee back to when the home is sold. That will get the builders off the hook by freeing up their funds so they can get back to building again. Every builder I interviewed said as much. The challenge to the Council is to figure out how to delay the payment of the Fee, not to eliminate it…….
So, now what are we left with…….the Impact Fee is ALSO being used to pay down the Forward Funding Bonds that were sold when our existing schools were built. You can cut off the revenue stream that the Impact Fee creates, but the Bonds must still be paid for. Also there are some in our leadership (DG said so in an Aegis article) who desire to raise the NON-DEDUCTABLE TRANSFER TAX (which affects existing taxpayers and new tax payers alike) to make up for the shortfall of no Impact Fee…So What is the wisdom to that???
Next, what happens if the Impact Fee is repealed?? The County is forced to raise taxes on the existing tax payers so the Bond obligations can be meet. So now where are you?? That is correct, you end up paying more taxes on top of what you are already paying. Does not sound too smart does it???? On top of that, try to get any funds from the State right after you eliminate a revenue stream from your income statement…….
As to the question of providing farmers with some type of exception. Under current subdivision regulations, farmers who subdivide often wish to include family conveyances. i.e. lots for family members.
If, for instance, a farm exists in an area where 10 acre lots are required; with a 100 acre farm that would equate to 10- ten acre lots. However, if the farmer has three children he could be granted three extra ots making the farm sub-dividable into 13 lots. This type of exception could also be applied to the Impact Fee. If the farmer wishes to subdivide his lot to cut out family conveyances, why not allow those lots o also be exempt from the impact fee? You can argue that these children are grand fathered into the tax structure since Dad, the farmer, has already been paying his fair share of taxes that went toward the schools funded by the impact fee. They really are not NEW residents coming to the area developing new houses. They are simply children of a taxpaying farmer living under his roof and tax structure who have now become grown up and relocating to another portion of the same farm in a separate structure.
In summary, Reforming the Impact Fee:
1. preserves a stream of revenue that is sorely needed for the new schools we will need to build in the near future and to service the existing Bond debt.
2. takes an unreasonable cash burden off of the builder.
3.suits the farmer wishing to deed a home to his children.
And why does an avid and active member of the Tea Party Movement support REFORMING not ELIMINATING the Impact Fee???
Because the Impact FEE reduces the tax burden on existing Tax Payers and those Tax Payers are in the constituency of the Tea Party Movement.
Bel Air Tea Party Movement