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St. Mary’s commissioners agree to 3% homestead cap; staff recommends cautious income-tax projection
Summary
Commissioners directed staff to notify the state to change the homestead property-tax assessment cap from 5% to 3%; finance staff recommended a conservative 3.5% income‑tax growth projection (staff noted a 3.8% three‑year figure based on receipts).
St. Mary's County Commissioners on Feb. 26 directed staff to lower the homestead assessment cap from 5% to 3% and to notify the state of that change, citing a desire to provide modest relief to homeowners while preserving flexibility in the county budget.
County finance staff presented updated revenue information, including a higher constant-yield assessment and new state information on personal-property and utilities values. Chief Financial Officer Jeanette Cudmore summarized the revenue changes and the basis for staff recommendations: staff showed total general-fund revenues excluding other financing sources up about 2.6 percent and reported that updated assessment data increased the county's debt capacity.
Commissioner discussion: Commissioner Hewitt proposed lowering the homestead tax-cap from 5% to 3% to reduce the annual assessment increase for homeowners on fixed incomes; “So that could be potentially more money. So I wanna recommend that we lower the homestead tax credit from 5% to 3%,” he said. Other commissioners debated trade-offs between returning revenue to taxpayers and retaining funds for emerging recurring costs (for example, school safety and jail operations). Commissioner Morgan cautioned that the county faces large upcoming recurring commitments but ultimately joined colleagues in supporting the 3% cap. The board reached consensus to proceed with 3% and to notify the state (the state notification deadline discussed in the meeting was March 15).
Income-tax projection: Finance staff reviewed local-income tax receipts and recommended a conservative conversion from tax‑year growth to fiscal-year revenue. Staff reported a three‑year average growth figure of 3.8 percent based on recent receipts but recommended budgeting at 3.5 percent “to be on the conservative side” in converting tax‑year figures to FY projections. Cudmore explained the difference between tax‑year receipts and the fiscal-year revenue conversion and noted that penalties and interest timing also affect fiscal recognition.
Why it matters: Lowering the homestead cap limits how quickly an individual homeowner's billed property tax can increase after a reassessment (the cap reduces the annual amount that may be added to a homeowner’s tax base following triennial reassessment). The change was estimated by staff to reduce county revenue liabilities by approximately $78,810 (staff-provided estimate discussed in meeting). Commissioners said the measure was intended to help homeowners on fixed incomes while accepting modest reductions to near‑term budget flexibility.
Follow-up: Staff will notify the state of the homestead cap change and incorporate the income-tax projection guidance into the next budget draft and multiyear projections. Commissioners asked for follow-up detail on the long-term ramification of the homestead change for CIP and personnel projections.
