Supreme Court Will Hear Maryland Income Tax Case

May 27, 2014

The U.S. Supreme Court has agreed to review the decision by the Maryland Court of Appeals in the case of Maryland State Comptroller of the Treasury v. Brian Wynne. Had the Court not granted certiorari for this case, the matter would have been considered fully settled, with Maryland’s counties liable for massive tax refunds dating back several years. MACo had joined with other actors seeking the decision announced today.

At issue in this case is whether the failure to allow a credit against the county income tax violates the commerce clause because it discriminates against interstate commerce. Future U.S. Supreme Court action will determine whether counties could be faced with refunding more than $190 million in income taxes, plus interest, for prior years and providing approximately $50 million a year in credits prospectively.

Solidifying the review, was a brief of the U.S. Solicitor General in April 2014 concluding that the U.S. Supreme Court should review the Maryland Court of Appeals decision. In January 2014, the U.S. Supreme Court requested the U.S. Solicitor General to comment on the case.

At the time the Maryland Attorney General petitioned the U.S. Supreme Court in the fall of 2013 to review the case, MACo joined an amicus curiae brief prepared by the International Municipal Lawyers Association (IMLA) in support of the review.  Beside IMLA and MACo, other parties of interest who joined the brief include the National Association of Counties, United States Conference of Mayors, and the International City/County Management Association.

Further legal documents and filings are available on the SCOTUSblog website.

While a definitive timeline is not known, it is likely that this case will be argued in the fall of 2014, with a decision any time thereafter.

Additional information on this case can be found on Conduit Street.

Montgomery Council Aiming to Curb Energy Tax

May 19, 2014

The Montgomery County Council took steps to reduce the increase in the county’s energy tax during its preliminary budget discussions. If approved, residential customers will see an average yearly reduction of $11 in their utility bills and the average commercial customers will save $111.

As reported by the Gazette:

Three years ago, the County Council agreed to nearly double the energy tax to increase revenue during the recession. In fiscal years 2013 and 2014, the council cut the increase by 10 percent each year. Some council members wanted to have another 10 percent cut in fiscal 2015, but the council voted 5-4 against that proposal and settled on a 7 percent decrease instead.

The Council is set to give final approval to the budget on May 22.

Applications for Federal Transportation Grant Program Far Exceed Available Funding

May 19, 2014

As reported by Better Roads, applications for the U.S. Department of Transportation’s (DOT) Transportation Investment Generating Economic Recovery Grant (TIGER) program far exceeded funding for the program.  Grant requests totaled over $9 billion for the $600 million program.

In a prepared statement, U.S. DOT Secretary Anthony Foxx offered his perspective on the large influx of applications.

“These applicants confirm what I saw as I traveled through eight states and 13 cities as part of my Invest in America, Commit to the Future bus tour last month – America is hungry for infrastructure investment,” said Secretary Foxx.  “The continued overwhelming demand for these grants demonstrates that communities want the kind of long-term funding our GROW AMERICA Act provides to build transportation projects across the country.”

As previously reported on Conduit Street, The GROW AMERICA Act, the Administration’s long-term transportation plan  was presented to Congress on April 29.

The statement also provides an overview of the TIGER Grant program.

The highly competitive TIGER program, which began as a part of the American Recovery and Reinvestment Act, offers federal funding possibilities for large, game-changing multi-modal projects.  These federal funds leverage money from private sector partners, state, local governments, metropolitan planning organizations and transit agencies.  The $474 million awarded under TIGER 2013 supported $1.8 billion in overall project investments.

U.S. DOT received 797 eligible applications for fiscal 2014, compared to 585 in fiscal 2013.

Missouri Lawmakers Considering Sales Tax Increase to Fund Transportation

May 1, 2014

As reported by Better Roads, the Missouri Senate passed a less than 1-cent sales tax increase to generate revenue for transportation.

If approved by the legislature, the 3/4-cent sales tax hike would generate $534 million each year for 10 years.

This measure will now go to the House, which formerly passed a 1 cent sales tax for transportation.

An article in the Kansas City Star provides more details on the legislation.

Under the legislation, the sales tax would need to be reauthorized by voters every 10 years, starting in 2024. Most of the revenue would go to roads and bridges, but some could be used to construct or operate other facilities, including railroads, ports, airports and transportation for disabled people.

Ten percent of the revenue would go toward local transportation projects.

The tax increase would not apply to purchases of food, and the constitutional amendment would bar the state from raising the gas tax or implementing toll roads during the lifespan of the sales tax.


NACo Lauds Federal Transportation Plan

April 30, 2014

The National Association of Counties (NACo) offered its strong support of the Administration’s long-term transportation plan that was presented to Congress on April 29.  As reported by Better Roads,

The bill, dubbed the GROW AMERICA Act, is based on President Barack Obama’s 4-year, $302 billion transportation reauthorization proposal.

In a statement released by NACo, President Linda Langston, Supervisor, Linn County, Iowa, said the following about the Administration’s plan,

“On behalf of America’s county governments, we thank the Obama administration, especially Secretary Anthony Foxx, for offering a detailed, multi-year federal surface transportation reauthorization bill. With counties owning 45 percent of the nation’s roads and 39 percent of bridges, we know first-hand the mounting costs for building and maintaining our nation’s transportation infrastructure. At the local level, we need a strong federal partner. We’re pleased the administration’s bill focuses on increasing federal investments, while also providing new resources and incentives for local governments. With the pending insolvency of the federal Highway Trust Fund and expiration of MAP-21, we’re encouraged by the renewed attention by the administration and key transportation leaders in Congress.”

An overview of the GROW AMERICA Act indicates it will do the following:

  • Address the shortfall in the Highway Trust Fund and provide $87 billion to address the nation’s backlog of deficient bridges and aging transit systems;
  • Create millions of new jobs to ensure America’s future competitiveness;
  • Increase safety across all modes of surface transportation, including increasing the civil penalties the National Highway Traffic Safety Administration (NHTSA) can levy against automakers who fail to act quickly on vehicle recalls;
  • Provide certainty to state and local governments that must engage in long-term planning;
  • Reduce project approval and permitting timelines while delivering better outcomes for communities and the environment;
  • Bolster efficient and reliable freight networks to support trade and economic growth; and
  • Create incentives to better align planning and investment decisions to comprehensively address regional economic needs while strengthening local decision-making.

For more information on surface transportation reauthorization, click HERE.
Click HERE to access NACo’s priorities for MAP-21 reauthorization. To view NACo’s report, “The Road Ahead: County Transportation Funding and Financing, click HERE.

The U.S. Department of Transportation (U.S. DOT) announced on Tuesday that Transportation Secretary Anthony Foxx is sending a long-term transportation bill to Congress. – See more at:*#sthash.1SQmX0zT.dpuf

Budget and Finance Affiliate Discusses Maintenance of Effort, County Income Tax Case

April 30, 2014

MACo’s affiliate organization, the Maryland Association of County Budget and Finance Officers, met on April 28 to discuss the 2014 legislative session and a number of budget related topics.  Kristy Michel, Chief Operating Officer, Maryland State Department of Education, attended the meeting to discuss State Aid for Education and Maintenance of Effort (MoE)  issues; and Margaret Ann Nolan, Howard County Solicitor, attended to provide an update on a recent county income tax case, Maryland State Comptroller of the Treasury v. Brian Wynne, which has been appealed to the U.S. Supreme Court.

State Aid for Education and Maintenance of Effort

Ms. Michel provided an overview of MoE and recent legislative changes that will affect the calculation. Since the changes to MoE were enacted in 2012, additional changes were made in Net taxable income (NTI), which is used as an indicator to measure wealth within the education formulas.   With this change, NTI would be measured based on tax returns filed by November 1 of each year, instead of the current September 1.  This change is being phased-in over five years, with additional education grants being given to counties whose formula aid is higher using the November 1 date. However, this change in calculating NTI, has affected other components of the education formulas.  Beginning in fiscal 2015, a county that has an education effort below the five-year statewide average education effort is required to increase its MOE payment to the school board in years when its local wealth base is increasing. The required increase is the lesser of the increase in a county’s per pupil wealth, the average statewide increase in per pupil local wealth, or 2.5%. The phasing in of the November date for NTI creates uncertainty as to which date should be used to calculate the additional MoE payment. Using the September 1 date for fiscal 2015, the average statewide increase was negative, meaning that the “kicker” provision, as it has been called, would not apply to any jurisdiction in fiscal 2015. Using the November 1 date, three jurisdictions would have been required to increase their MoE appropriation. The General Assembly adopted language clarifying that the September 1 date would be used to calculate wealth in the formula during the phase-in of the date change for NTI. The November 1 date will be used beginning in fiscal 2018.

During the discussion with budget and finance directors, Ms. Michel stated she was open to discussing improvements in the MoE process.

Maryland State Comptroller of the Treasury v. Brian Wynne

Ms. Nolan provided an overview and status update of the Maryland State Comptroller of the Treasury v. Brian Wynne case. At issue in this case is whether the failure to allow a credit against the county income tax violates the commerce clause because it discriminates against interstate commerce. The case has been appealed to the Supreme Court and the Court has asked the U.S. Solicitor General to comment expressing the view of the United States. In his response, the U.S. Solicitor General concluded that the Court should review the decision of the Maryland Court of Appeals.  The Supreme Court has scheduled the case for Conference on May 15. If the Supreme Court  takes up the case, it will likely be argued in the fall of 2014 with a decision any time thereafter. If it does not take up the case and the Maryland Court of Appeals decision stands, counties could be faced with refunding more than $190 million in local income taxes, plus interest, for prior years and providing approximately $50 million a year in credits prospectively.

Other agenda items included a 2014 legislative wrap up by MACo’s Legislative Director, Andrea Mansfield, the county role in bail reform and next steps, and a discussion of the county financial management presentation used in a course that is offered by the Academy of Excellence for Local Government.

The next meeting of the affiliate will be held during the MACo Summer Conference at the Ocean City Convention Center on Friday, August 15.

Meeting Agenda and Handout
2014 Legislative Highlights and Statistics

Counties to Receive $10 Million for Pothole Repairs in Fiscal 2014

April 25, 2014

County governments and Baltimore City will be receiving $10 million in the fiscal 2014 budget for pothole repairs and other road repairs necessitated by the extreme winter weather.  As reported by the Baltimore Sun:

Tens of thousands of potholes have been reported across the region this winter, with local jurisdictions like Baltimore reporting filling hundreds per day in an attempt to keep up.

In a statement, O’Malley said that during this “long, harsh winter,” local and state road crews came together in “true Maryland spirit” to keep roadways safe.

“Unfortunately,” he said, “our work is not done.”

The $10 million will be split among the state’s local jurisdictions according to mileage.

MACo advocated for transportation funding this session and is pleased that county needs were recognized, especially during this harsh winter.

At this time, all counties have submitted applications to participate in this grant funding and its anticipated that funds will be allocated by mid-May.

Additional coverage of discussions that took place can be found below.

Final Fiscal 2015 Budget Actions Adopted – Local Government Summary

Governor Announces Supplemental Budget Will Provide Pothole Funding



2014 “90 Day Report” Now Available On General Assembly Website

April 16, 2014

The “90 Day Report” is now available online on the Maryland General Assembly website.  The Department of Legislative Services produces this report each year, which summarizes major issues discussed and/or enacted during the General Assembly session.

Sections of particular interest to local governments are listed below.

2014 End of Session Wrap Up: Tax and Revenue – Transportation Related Legislation

April 9, 2014

This post summarizes the status of tax and revenue bills related to transportation issues that MACo either considered or took a position on.

Highway User Revenue Restoration: One of MACo’ s 2014 legislative initiatives, HB 1067 / SB 664 would have incrementally restored local governments to a 20% share of Highway User Revenues (HUR) over a three-year time frame beginning in FY 2016. Prior to fiscal 2010, local governments shared in 30% of these revenues. MACo supported this legislation stating that with the recent expansion of transportation revenues, it feels strongly that it is now time for local governments to again play a more significant role in the State’s transportation funding plan.

Final Status:  Both bills had hearings in their respective committees, but no further action was taken. The discussion on SB 664 during the Senate hearing before the Budget and Taxation Committee led to the inclusion of $10 million for county pothole repairs in the fiscal 2015 budget.

HB 1331 / SB 765 would have restored local governments to a 30% share of Highway User Revenue (HUR) beginning in fiscal 2015.  MACo also supported this legislation.

Final Status: Both bills had hearings in their respective committees, but no further action was taken.

Special Taxing Districts for Transportation Improvements: SB 627 / HB 1279 would have authorized local governments to set property tax rates in special taxing districts for different classes of property with the revenues going towards state and local transportation improvements. This legislation also authorized those charter counties with property tax limitations to set rates at a higher level. MACo did not take a position on this bill.

Final Status: Both bills had hearings in their respective committees, but no further action was taken.

Local Vehicle Registration Fee: SB 629 would have authorized local governments to impose up to a $20 local vehicle registration fee. Revenues raised through this fee would be matched by the State through the Transportation Trust Fund.  MACo did not take a position on this legislation.

Final Status: SB 629 was heard by the Senate Budget and Taxation Committee, but no further action was taken.

2014 End of Session Wrap Up: Tax and Revenue – Property Tax Related Legislation

April 8, 2014

This post summarizes the status of tax and revenue bills related to the property tax that MACo either considered or took a position on.

Homestead Tax Credit – Settlor, Grantor, or Beneficiary of a Trust: HB 227 / SB 572 expands eligibility for receiving the Homestead Property Tax Credit to include a settlor, grantor, or beneficiary of a trust if the person serving in this capacity does not pay rent or other remuneration to reside in the property and legal title to the dwelling is held in the name of the trust or in the names of the trustees. As introduced, the bill also provided for a seven-year refund period. MACo supported the bill with amendments to remove this unusual refund period language.  Under current law, property tax refunds may be sought for no more than three years. MACo believes this is a reasonable timeframe and a justification did not exist for an expansion. Working with the State Department of Assessments and Taxation, the bill sponsor, and the Committee, MACo was successful in amending the bill to remove its retroactive application.

Final Status: HB 227 / SB 572 passed the General Assembly and is now awaiting the Governor’s signature.

Property Tax ExemptionsHB 245 would have authorized a local government to provide a property tax exemption for real property owned by an affordable housing land trust, but not yet subject to an affordable housing land trust agreement. MACo supported this legislation stating it would give counties flexibility to establish a local property tax exemption to further their goals of providing sustainable, affordable housing.

Final Status: HB 245 had a hearing in the House Ways and Means Committee with no further action. However, a local bill just affecting Frederick County did pass the General Assembly, (HB 321 / SB 616).

HB 863 authorizes a local government to provide a property tax exemption for community managed open space that is subject to a cooperative agreement with the Maryland Environmental Trust. As amended, the bill requires a community open space management entity to enter into an agreement with the appropriate local governing body that is subject to periodic review before a property tax exemption is granted. MACo supports this approach as it would allow the local government to affirmatively approve the property as newly tax exempt instead of providing for a blanket exemption. The periodic review would ensure that this property continues to be used most appropriately as community open space.

Final Status: HB 863 passed the General Assembly and is awaiting the Governor’s signature. 

HB 898 / SB 872 would have expanded the personal property tax exemption for specified manufacturing personal property by including the handling or movement of a finished product at a manufacturing site after the last step of production through the next immediate step before storage and shipping.  MACo took an opposing position on this legislation.

Final Status:  HB 898 and SB 872 were withdrawn by their House and Senate sponsors.

HB 1252 would have significantly expand an existing property tax exemption for disabled veterans and surviving spouses. Under current law, for a property tax exemption to be granted to a disabled veteran or surviving spouse, the disabled veteran must have a 100% service connected disability. HB 1252 expands this criteria to apply to disabled veterans with a service connected disability of 50% or greater. MACo opposed this bill as it would negatively affect local government revenues.

Final Status: HB 1252 was withdrawn by the sponsor.

Property Tax Credit for Commercial Structures: SB 605 / HB 691 provides for a property tax credit to bring commercial structures into compliance with building and safety codes. As introduced, the bill was very prescriptive  in terms of the criteria for the credit. MACo supported the bill with amendments to give flexibility to determine the amount of the credit and the duration. The bill as amended specifies that the amount of the credit may be up to 50% of the amount of qualifying investment and that the credit may be granted for up to a period of 10 years.

Final Status: SB 605 passed the General Assembly and is awaiting the Governor’s signature.  Its cross file, HB 691 was not voted by the House Ways and Means Committee.

Notice of Tax Bill Address Change: SB 179 would have established a local government-based process to allow an owner of real property to request property tax bills be sent to an address other than the actual address of the real property. The bill would also allow anyone with an interest in the real property to request a copy of the tax bill, and prohibit a property from being sold at tax sale if the taxing authority was not compliant with the notification provisions. MACo opposed this legislation as it would present significant fiscal and administrative challenges for local governments.

Final Status: SB 179 was withdrawn by the sponsor.


Get every new post delivered to your Inbox.

Join 2,119 other followers