Frederick County Commissioners Consider Overhauling Fire Tax

May 16, 2013

As part of their Fiscal Year 2014 budget discussions, Frederick County Commissioners are considering a change in funding for fire and rescue services. Currently funded through a fire tax, the proposal would abolish the fire tax and fund fire and rescue services mainly through the property tax. As reported by the Frederick News-Post:

In recent years, the fire tax has fallen far short of covering costs, and bridging the gap has meant siphoning millions of dollars each year from the county general fund.

The fire tax fund’s projected shortfall for fiscal 2014 was $12 million, said Regina Howell, the county’s budget officer.

The plan now under consideration would abolish the fire tax; it would fund emergency services mainly through property taxes, which would go up by 12.8 cents to $1.064 per $100 of assessed value.

The drafted plan would also shave more than $1 million from emergency services costs by reducing manpower at New Market Volunteer Fire Co. and Libertytown Volunteer Fire Department, as well as cutting a health and wellness program and part-time fire marshal position.

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Posted by Andrea Mansfield

Federal Marketplace Fairness Act and County Revenues

May 10, 2013

The Marketplace Fairness Act of 2013, which recently passed the U.S. Senate,  would allow states  and local governments to impose their existing sales tax on internet sales. The legislation also requires states to simplify or “streamline” their sales tax structure to make it easier for online companies to comply with the new requirements.

As passed by the U.S. Senate, states have two options for simplifying the state sales tax.  Below is a brief summary of these requirements.

Option 1: A state can join the twenty-four states that have already voluntarily adopted the simplification measures of the Streamlined Sales and Use Tax Agreement (SSUTA), which has been developed over the last eleven years by forty-four states and more than eighty-five businesses with the goal of making sales tax collection easy. Any state which is in compliance with the SSUTA and has achieved Full Member status as a SSUTA implementing state will have collection authority on the first day of the calendar quarter that is at least 90 days after enactment.

Option 2: Alternatively, states can meet essentially five simplification mandates listed in the bill. States that choose this option must agree to:

  1. Notify retailers in advance of any rate changes within the state
  2. Designate a single state organization to handle sales tax registrations, filings, and audits
  3. Establish a uniform sales tax base for use throughout the state
  4. Use destination sourcing to determine sales tax rates for out-of-state purchases (a purchase made by a consumer in California from a retailer in Ohio is taxed at the California rate, and the sales tax collected is remitted to California to fund projects and services there)

As previously reported on Conduit Street, adopting the Streamlined Sales and Use Tax Agreement in Maryland could have fiscal consequences for local governments since local taxes that are not widely imposed or whose rates vary would not be permitted.  Local sales and use taxes affected would mainly be those on telephones, energy and other utilities.  These revenues total approximately $340 million.

However, Option 2 offers a much better approach that would allow the State to appropriately define the sales tax base for this purpose, which could leave local revenues out of the equation.  Should the Marketplace Fairness Act of 2013 become law, MACo believes Option 2 provides the simplest and most appropriate approach for implementation.

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Posted by Andrea Mansfield

GAO Predicts Tough Times for Local Governments

May 9, 2013

As reported in Governing, the Governmental Accountability Office (GAO) recently released a report showing the fiscal challenges that state and local governments will face in coming years as costs increase and traditional revenue sources shrink.

To close the fiscal gap, governments would need to trim current expenditures by 14.2 percent and maintain that level of spending as a share of GDP in future budgets.

The report cites health care and pension costs as one of the main drivers of increasing expenses for state and local governments.

Most notably, the report cites rising health costs as the primary driver of the sector’s long-term fiscal challenges. Medicaid expenditures, along with health insurance costs for public employees and retirees, are expected to rise sharply.

A slow economic recovery and weakening tax returns present a difficulty in making up the needed budget.

On the revenue side, eroding tax bases have “buried” states, Boyd said. The economy has slowly shifted from goods to services, which governments traditionally are reluctant to collect taxes on. Furthermore, the rise of the Internet made it difficult to collect sales tax, particularly with the growth of downloadable music and e-Books.

For more information, including additional data and a graphical illustration, see the full story from Governing.

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Posted by Robin Clark

U.S. Senate Approves Taxation of Internet Sales

May 7, 2013

As reported by the Baltimore Sun (limited free views available), the United State Senate approved the Marketplace Fairness Act of 2013 on May 6, which would allow states  and local governments to impose their existing sales tax on internet sales.

The bill, which passed 69-27, would resolve a long-standing complaint of  brick-and-mortar business owners, who say they struggle to compete with online  companies that don’t charge sales tax. The legislation requires Internet sellers  to collect sales tax and send that money back to state treasuries.

This legislative proposal, should it pass Congress, would also have a broader effect in Maryland.  As previously reported on Conduit Street,

For Marylanders, this legislative change at the federal level will result in the gas tax, which passed during the 2013 session, increasing at a lower rate.  As reported by the Baltimore Sun:

In Maryland, the General Assembly just approved legislation that is expected to increase the state’s 23.5-cents-a-gallon gas tax by about 20 cents by mid-2016. But if the federal government allows the state to apply its sales tax to Internet retailers, motorists could be spared about 7 cents of the gas tax increase, General Assembly officials have said.

The motor fuel tax legislation that passed phases in a 5-cent sales tax on gasoline with the final two percent increase taking effect if the federal legislation does not take effect.

Governor O’Malley, Treasurer Kopp, and Comptroller Franchot have expressed their support of the Marketplace Fairness Act.

Additional information on the Marketplace Fairness Act of 2013 can be found on the NACo website.

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Posted by Andrea Mansfield

Charles County Budget Supports Schools, Employee Increases

May 3, 2013

The Charles County Commissioners passed their county budget this week, incorporating multiple proposals into a final product that grants employee increases for county and school employees.

From coverage on SoMdNews.com:

“We do the best we can,” [Commission President Candace Quinn] Kelly said after the budget’s adoption. “I wish we could always do more, but I think this is a good starting point, and it certainly is heartwarming to finally get our law enforcement officers up to speed and our staff with a quick raise, and we appreciate the board of education’s efforts to try to do their best with this funding for the teachers.”

The county received a budget proposal from its school board that sought a 15% funding increase, requiring more than $23 million in new funds. The article details that “The Charles County Board of Education will receive an additional $4 million — half of it toward a step increase for county teachers and the other half for nonrecurring costs.”

The funding plan required increases in both the property and income tax rates in the county:

To pay for the added items, the final budget includes a property tax rate of $1.141 per $100 of assessed value, an 8.4-cent and 7.9 percent increase on the current $1.057 rate.

…

The final budget includes a small increase to the local income tax rate, from 2.9 percent to 3.03 percent.

Read the full online coverage here.

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Posted by Michael Sanderson

Maryland Leaders: Tax the E-tailers

May 2, 2013

As reported in the Daily Record, Governor Martin O’Malley, Comptroller Peter Franchot and Treasurer Nancy K. Kopp expressed a unified plea to federal lawmakers Wednesday, asking them to pass the Marketplace Fairness Act of 2013, legislation that would force online retailers to charge their customers a state sales tax.

Franchot, Maryland’s tax collector, said the federal legislation would mean $173 million in new revenue for Maryland. It would also hold down a gas tax increase approved by the General Assembly this year. . . O’Malley responded with a “hear, hear,” and Kopp said she only hoped the U.S. House of Representatives — “at times … a less enlightened body,” she said — would follow the Senate‘s apparent example.

For more information, see the full story from the Daily Record.

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Posted by Robin Clark

Anne Arundel Stormwater Fee Kept Alive By Council Override

May 1, 2013

Today the Anne Arundel County Council voted to override County Executive Neuman’s veto, keeping the legislation alive for potential further refinement before implementation. Council procedures would have required a completely new process had the original proposal been defeated.

From coverage in the Baltimore Sun (limited free views available):

Council members are now expected to tweak the stormwater fees in the coming weeks.

Neuman’s veto last week put Anne Arundel as the first county to take an official action against the state-mandated stormwater fees, derided by conservatives as a “rain tax.”

…

In her veto, Neuman asked the council to consider a new fee structure and to phase-in the fees. She also pledged to have her staff do more public education about the fees because she felt too few people knew about them.

Read the full Sun coverage online.

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Posted by Michael Sanderson

Counties Near Local Stormwater Fee Deadline

April 26, 2013

According to a state  law passed in the 2012 legislative session, ten counties in Maryland are required to implement local stormwater fee legislation by July 1, 2013.  The other thirteen counties are exempt from the requirement.  Recent coverage in the Maryland Reporter questions whether the General Assembly might step in during its 2014 session to change the law.  As described by the Reporter, the Senate approved an amendment to the law on the last day of the General Assembly April 8, but a House committee let the bill die.

“As you see this thing played out, the legislature will do something,” Senate Budget and Taxation Committee Chairman Ed Kasemeyer told a Howard County Chamber of Commerce breakfast. . . “I think it’s not over yet,” said Kasemeyer, who had sought to delay implementation of the fees for two years, amending a bill exempting nonprofit groups and churches from the charges.

For now, county governments subject to the law continue towards implementation, with their legislative bodies developing and considering local bills.  Baltimore, Howard, Montgomery and Anne Arundel’s county councils have passed bills, however, as reported in the Baltimore Sun, Anne Arundel County Executive Laura Neuman on Thursday vetoed that county’s version of the state-mandated stormwater management fee, effectively sending it back to the county council for further consideration. According to the Sun, Neuman said the legislation needs more discussion before becoming law,

“Every single person I asked — citizens of this county — not one of them was aware of it. If they were aware, they said, ‘Is this the gas tax?’” she said. “The vast majority of the public is not fully aware that this new tax is coming.”

The following is a list of links that MACo has gathered of local legislation under consideration or passed.

Other affected jurisdictions are in various stages of development in their own fee schedules.

For more information on this topic, see the full story from the Baltimore Sun, coverage from the Maryland Reporter, and our previous posts on Conduit Street,

Examiner Article Questions State and Local Government Stormwater Fee Exemption

Sun Supports Stormwater Fees Toward Bay Cleanup

Counties Pass Local Stormwater Fees

Stormwater Legislation Takes Sharp Turn In Senate

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Posted by Robin Clark

Montgomery County Council Considers Limiting Scope of “Bag Tax”

April 25, 2013

An April 22 Washington Post article discusses a proposal before the Montgomery County Council to limit the applicability of the County’s current tax on disposable paper and plastic bags.  The current tax was passed by the County Council in 2011.

Montgomery’s nickel tax on disposable bags would be rolled back to cover only stores where food is sold under a bill to be introduced Tuesday by three County Council members.  …

The bill would impose the tax only on businesses where food represents  more than 2 percent of gross sales.  It would, however, continue to cover non-food items sold in those stores. The measure would repeal the tax on plastic food take-out bags.

The article also notes that while County statistics suggest an increase in the consumption of disposable bags since 2012, environmental groups maintain that the tax has had a “demonstrable impact” in reducing the number of bags collected along County waterways.

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Posted by Les Knapp

Online Sales Tax Moving in U.S. Senate, Faces Uncertainty in House

April 23, 2013

The taxation of internet sales has been a topic of discussion in recent years at the federal and state level. Retailers and others believe this would level the playing field among companies who sell products over the internet not collecting a state’s sale tax because a physical location does not exist in a state, and those who have a physical store location in a state, and are therefore required to collect and remit sales taxes. This change would also bring in additional state sales tax revenue.

Legislation to impose a sales tax on internet sales has been introduced at both the federal and state level, however this is the first time legislation has advanced. As reported by the Washington Business Journal:

Sales taxes on Internet purchases grew one step closer to becoming a reality Monday evening when the Marketplace Fairness Act easily cleared a Senate procedural hurdle by a 74-20 margin.

Final passage is expected later this week. The legislation would allow states that simplify their sales tax systems to collect taxes on purchases made by their residents from online businesses based in other states. Under current law, retailers have to collect sales taxes only for states where they have a physical presence.

Although the legislation is moving in the Senate, it is projected to have a more difficult time moving through the House as there are concerns that this change will feel like a new tax to consumers, subject online companies to many different state sales tax structures, and lead to an expansion of financial transaction taxes.

For Marylanders, this legislative change at the federal level will result in the gas tax, which passed during the 2013 session, increasing at a lower rate.  As reported by the Baltimore Sun:

In Maryland, the General Assembly just approved legislation that is expected to increase the state’s 23.5-cents-a-gallon gas tax by about 20 cents by mid-2016. But if the federal government allows the state to apply its sales tax to Internet retailers, motorists could be spared about 7 cents of the gas tax increase, General Assembly officials have said.

The motor fuel tax legislation that passed phases in a 5-cent sales tax on gasoline with the final two percent increase taking effect if the federal legislation does not take effect.

This change could also have broader fiscal consequences for local governments.  As previously reported on Conduit Street:

State law says Maryland will adopt if the authority to require online retailers to collect taxes on remote sales is provided by the U.S. Congress. This Agreement provides for a more simple collection of sales taxes through uniform product definitions and centralized collections, among other changes.

Under this Agreement, local taxes that are not widely imposed or whose rates vary would not be permitted.  Since most counties impose a hotel tax, the effect is unclear. However, other local sales and service taxes such as those on energy and utilities will most likely be affected.

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Posted by Andrea Mansfield

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