Property Tax Rates for Overlapping Municipal Services: Annapolis, MD & Anne Arundel County, MD

The City of Annapolis, Maryland (City), population 40,000 is part of Anne Arundel County, Maryland (County), population 590,000. Anne Arundel County provides all the basic municipal governmental services (such as fire, police, public works (including water & sewer service), recreation & parks, planning & zoning, inspections and permits, K-12 education, courts, health, & social welfare, public transportation, etc.) within the county, except for those municipal services provided by City of Annapolis to its residents (fire, police, public works (including water & sewer service), planning & zoning, inspections & permits, recreation and parks, public transportation). Residents of Annapolis and county residents outside of Annapolis are generally satisfied with the level and quality of service provided by the respective governmental units; however for FY2023, a property taxpayer living outside of Annapolis pays a County property tax rate of $0.933 per $100 of assessment; while an Annapolis taxpayer pays a reduced County property tax rate of $0.559 per $100 of assessment, plus a City of Annapolis property tax rate of $0.738 per $100 of assessment. Thus the combined property tax rate for Annapolis property taxpayers is $1.297 ($0.559 + $0.738), or a tax rate that is 39% greater than the County property tax rate.

Additionally, the above tax rate difference is compounded by the fact that the assessment base that the City of Annapolis utilizes to levy tax bills is greater than that utilized by the County for that same property, because the City uses an annual assessment inflation factor capped at 10% per year for a taxpayer’s primary residence, rather than a 2% maximum increase per year utilized by the County. (Property assessments are determined tri-annually by the Maryland State Department of Assessments and Taxation, and assessment increases are then phased in over a three year period at rates between 0% and 10% annually, which are determined by each local jurisdiction.)

The combination of higher tax rates applicable to larger assessments for Annapolis taxpayers frequently results in many individual cases, of a tax bill that is over 50% greater for Annapolis taxpayers compared to the cost that the County taxpayer experiences for the equivalent services. So a fundamental question is –
Should the City of Annapolis, instead of providing the duplicated services, ask the County to deliver some or all of the duplicated services, thereby taking advantage of economies of scale, and allowing for overhead costs to be spread over a lager base, thereby resulting in significant cost savings to the City property taxpayer, who is also a County citizen?

Additional Background:

The City of Annapolis was founded in 1649 as Providence on the north shore of the confluence of the Severn River and the Chesapeake Bay. Later it moved to the south shore of the Severn River which offered a better harbor, and renamed Anne Arundel Town, honoring Anne Arundell (1616-1649), wife of Cecil Calvert, 2nd Lord Baltimore, and was renamed Annapolis in 1695 in honor of Princess Anne, youngest sister of reigning Queen Mary. It received its Charter in 1709, and serves as the County Seat of Anne Arundel County. In 1694 the capital of Maryland was moved from St. Mary’s City in southern Maryland to its current location of Annapolis. The Maryland State House, constructed from 1772-1779, serves as the oldest state capitol building in continuous use to this day.

Annapolis is an historic town dating back to pre-Revolutionary times, and in those days was known as the “Athens of America”. It served as the nation’s capital from November 1783 until August 1784, and is the only state house to have served as the U. S. Capitol. During this time, two significant events in our nation’s history took place: (1) December 23, 1783, George Washington resigned his commission as Commander of the Continental Army, becoming the first, and only military leader in world history, to turn over the leadership of a country to civilian control; and (2) January 14, 1784, the Treaty of Paris was ratified, then officially ending the Revolutionary War, thus making Annapolis the first capital of the United states. 21st century Annapolis contains the largest number of Revolutionary War structures, including the homes of the four Maryland signers of the Declaration of Independence: Charles Carroll, Samuel Chase, William Paca, and Thomas Stone. Annapolis was spared during the War of 1812, when the British invaded and burned Washington, and then moved on to Baltimore where they were unable to defeat the Americans. The bombardment of Baltimore (September 13-14, 1814) served as the inspiration of Francis Scott Key to compose the Star Spangled Banner as an eye witness. Mr. Key was a graduate of Annapolis’ St. John’s College (1796) and was married in the above mentioned home of Declaration of Independence signer Samuel Chase (January 1, 1802).

In 1845, the United States Naval Academy was established at a former Army fort, Fort Severn, on the south bank of the Severn River and the Chesapeake Bay, growing from a small military school of 50 midshipmen, to today’s 4,100 enrollment. During the Civil War, given the unpredictable sympathy of the Maryland populace, the Naval Academy was moved to Newport, Rhode, Island, but returned shortly after the War’s conclusion.

During the 19th century, Annapolis remained a relatively small town, while Baltimore, 30 miles to the north, grew in economic importance, primarily due to its large harbor, located further west than other eastern ports of Boston, New York, Philadelphia, and Norfolk, and the home of the first American Railroad, the Baltimore & Ohio, which served as a gateway to the west. Annapolis provided basic governmental services to its population in the 19th century and as its population gradually increased, so too did the scope of its governmental services. Since inception of its charter, the City has utilized a weak mayor form of government (Mayor, elected city-wide and Board of Aldermen (varied number over the years, currently 8, elected by ward)) as it continues to operate under this structure to this day, with each elected official having one vote on a City Council of 9.

Anne Arundel County had an agrarian based economy during most of the 19th century, with Annapolis being the only “urban hub” of the County. Hence, Annapolis provided more governmental services to its citizens who lived in a compact area. The County government provided few comparable services to its dispersed, rural citizenry. The northern portion of the County became more focused on industry in the early 20th century as the neighboring Port of Baltimore continued to prosper. After World War II, Baltimore continued to prosper as an industrial and financial hub of Maryland, and Anne Arundel County’s population swelled as it became a bedroom community for Baltimore, thereby causing the County government to expand its service offerings. A second wave of population growth occurred beginning in the 1950’s as the County began to be an attractive location for Washington, D.C. workers. These same growth factors impacted the growth of the population of Annapolis.

In 1964, the citizens of Anne Arundel County recognized the need to modernize its government structure in order to operate in its now urban environment. Up until 1964 the County operated under a County Commissioner form of government, with a “county” manager. The form of government changed after a citizen driven governmental reform movement resulted in the establishment of a modern Charter government, which established a strong County Executive and a County Council. The City of Annapolis, on the other hand, continued to operate its government under its weak mayor system.