Published: September 03, 2008 09:22 am      

City officials approve separate tax credit

Mayor, council join county in rate reduction, but later can act independently

CUMBERLAND — Though city officials will be approving a homestead tax credit to match that of Allegany County, they now have the option to move separately from the county in the future.

“I believe we should make our own ordinance and go with the county,” Mayor Lee Fiedler said at the city meeting Tuesday night. “But it allows us to adjust. I think it’s a good adjustment they’re making.”

The decision means that with the anticipated move by Allegany County to adjust the Homestead Tax Credit from the 10 percent of previous years to 7 percent, the city will be doing the same for fiscal 2010.

City Administrator Jeff Repp said that for several years, the county has been at a rate of 10 percent, and the city didn’t have an ordinance separating itself from the rate set by the county.

Approving the 7 percent adjustment will cap increases in property tax made with updated assessments to that amount, while not affecting those at a lower rate.

In making it a city ordinance, the option will allow for Cumberland to have a different rate cap than the rest of the county.

If a person’s rate would increase less than 7 percent, their rate would not be affected by the change, said Repp.

The move could be a potential loss of revenue for Cumberland of $35,729.29 with the unanimous adoption of the credit by the mayor and three council members in attendance — Councilwoman Mary Beth Pirolozzi was absent from Tuesday’s meeting.

Michael Scott Cohen, city solicitor, said it would slow the increase, but not necessarily prevent the city from getting that revenue in the future.

Repp said the city had until Nov. 25 to submit its decision to the state.

Fiedler said he felt it was best for the city to have the option to go separate from the county. He said changes in the real estate market could drive prices up in the county and down in the city or vice versa, which could mean the tax credit could affect residents and the local government in “very different ways.”

For a resident to qualify for the tax rate, they must have applied to the state by the Sept. 1, 2008, deadline, and the home being applied for must be the primary residence.

“I think we need to get down to 5 percent as quickly as possible,” said city resident Jim Combs. “It’s for the homeowners only. The people who actually live in that home ... Those that lived in the home years and years need that kind of break.”

Contact Sarah Moses at smoses@times-news.com.