House Stormwater Fee “Repeal” Bill Dressed Up For Friday Vote

A dramatically amended version of SB 863, the Senate President’s legislation to repeal the county stormwater fee mandate and institute widespread controls and penalties on county spending, will be before the House Committee on Environment and Transportation Friday for a vote. A special workgroup labored for several days, both with stakeholder input and privately, to assemble a substantially new version of the now lengthy legislation.

View a copy of the full committee reprint.

The bill conditions any county’s repeal or reduction of its fee on an approved financial assurance plan. A similar plan will be required of the 10 Phase I MPDES permit counties (those currently subject to the fee mandate) every two years, beginning in July 2016. If the county fails to demonstrate rigidly determined progress (measured by funding, not by project completion or similar deliverables) the Department of the Environment must withhold various state funding sources and may impose a per-day penalty on the county to elicit compliance.

The bill also mandates counties who “includes the cost of stormwater remediation in the county’s operating budget or capital budget” (a rather ambiguous phrasing) to provide a property tax reduction to taxpayers in municipal areas unless the county provides the primary stormwater services in that municipality. This treatment is unparalleled in Maryland tax law, and will seemingly require multiple counties who currently have negotiated tax setoffs (especially municipal tax rebates) to scrap them in favor of this new standard.

The bill differs substantially from that passed by the Senate, so once it passes the House (assuming it survives the various votes to do so) it will require either a concurrence by the Senate with this version, or the two chambers’ differences will need to be worked out to a final iteration.

Legislation Increases Baltimore City Tax Sale Threshold

Legislation that would make it more difficult for Baltimore City to take owner-occupied property to tax sale for unpaid water and sewer bills has passed the General Assembly. As reported by the Baltimore Sun,

The Senate-approved bill, sponsored by Baltimore Democratic Sen. Nathaniel McFadden, passed the House 136-3 and will now go to Gov. Larry Hogan for his signature. The Senate also approved the House bill, sponsored by Baltimore Democratic Del. Nathaniel Oaks, unanimously.

The legislation, which has the support of Mayor Stephanie Rawlings-Blake, raises the minimum amount of unpaid taxes that could trigger a tax sale from $250 to $750. The new threshold for water and sewer liens would also be $750, up from $350.

Senate Bill 439

House Bill 1035

House Committee Votes Down Bills to Restore Local Highway User Revenues

The House Environment and Transportation Committee has voted down several bills that would have restored funding for local roads and bridges. These bills, HB 837, HB 899, and HB 1003, would have provided additional local revenue by either phasing-in the previous distribution of local highway user revenues or allowing a local share of transportation revenues generated through recent changes to motor fuel taxes.

MACo strongly supported this legislation as “Transportation Funding Restoration” is one of MACo’s priorities for the 2015 General Assembly Session. MACo believes this legislation and HB 484, introduced on behalf of the Administration, offer viable approaches for restoring locally funded roadways and urged the Committee to give any combination of this legislation a favorable report.

The Committee has taken no action on HB 484, nor has a Senate Committee taken action on its crossfile, SB 591. However, the Governor issued a supplemental budget early in session to provide an additional $25 million for local roadways in FY 2016 -$4 million counties; $19 million municipalities; and $2 million Baltimore City . The House and Senate have approved this allocation as part of the FY 2016 budget.

MACo’s written testimony can be found here. For more on MACo’s 2015 legislation, visit the Legislative Database.

Personal Property Tax Break in Limbo Over Audit Provision

SB 590, which would mandate local governments to provide a personal property tax exemption for businesses with personal property of a total assessed value of $10,000 or less, passed the Maryland Senate last week after being amended to include an audit of personal property tax returns. The bill’s passage as amended has become questionable now that state leaders have gained a better understanding of  the full extent of the audit provision.

As reported by the Baltimore Sun,

The transformation — achieved through a unanimous vote of the Maryland Senate this week — undercuts the Republican governor’s pro-business message by tying a $72 tax break for tiny firms to a widespread audit of personal property tax returns filed by the state’s largest companies.

“It’s the Robin Hood effect: Take from the big business and give to the small,” House Speaker Michael E. Busch, a Democrat, said of the Senate action. He said he expects the state’s business community to vociferously object.

The Administration has also raised concerns.

Hogan’s spokesman and senior staffers said they were aware the audit provision was added to the bill by a Senate committee, but at the time they did not realize its effect. They said they don’t support forcing companies to undergo audits.

“We’re concerned about what kind of other stresses it would put on businesses in Maryland,” said Hogan spokesman Doug Mayer.

Senator Richard Madaleno, Vice Chair of the Senate Budget and Taxation Committee, explained the Senate’s intent in the article.

…the panel’s intention was clear: If Hogan wanted a tax break for some businesses, the state needed to be sure it was appropriately collecting taxes on the rest.

MACo opposed SB 590 and its House crossfile, HB 480, stating that incentives and reductions in local tax rates or bases should be a local decision, not one mandated by the State

MACo’s written testimony can be found here. For more on MACo’s 2015 legislation, visit the Legislative Database.

Tax Amnesty Legislation Passes the General Assembly

The Maryland Senate gave final approval to legislation Friday that would create a “Tax Amnesty” period for individuals and corporations who owe back taxes.  Those who come forward during the amnesty period, September 1 through October 30, 2015, would not be required to pay penalties and one-half of the interest due on taxes attributable to the nonpayment, nonreporting, or underreporting of income taxes, withholding taxes, sales and use taxes, or admissions and amusement taxes that are paid during the amnesty period.

Tax Amnesty periods have been enacted in the past during times of budget difficulties.  Those enacted in 1987, 2001, and 2009 have generated between $33 million and $40 million in additional revenues. Local governments benefit from back income taxes and admissions and amusement taxes paid.

According to the fiscal note, the amnesty period  would generate $11.4 million in State revenue and $3.1 million in local revenue for FY 2016.

The House crossfile will receive final approval this week.


Sun Derides Stormwater Fee Repeal as “Charade”

As the General Assembly focused on stormwater issues, the Baltimore Sun editorial board offered its thoughts — and suggested that the heavily-amended stormwater fee repeal legislation (SB 863, heard earlier this week in the House) may be counterproductive.

Curiously, they hinge much of their argument on a letter submitted by the Carroll County Commissioners, who essentially opposed the legislation passed by the Senate (and its many additional penalties and reporting requirements), despite actively opposing the so-called “rain tax” law since its inception.

From the Sun editorial:

As they [the Carroll County Commissioners] see it, the repeal “could actually harm Carroll and significantly increase compliance costs without any additional environmental gains” because the county would be subject to more stringent requirements for explaining its plans and financing. It might just be better to institute a fee, they concede.

So there you have it, straight from the epicenter of rain tax derision: Repealing the stormwater fee requirement is worse than keeping it. Perhaps now we can drop this whole charade, admit that the state has to do something about polluted stormwater and have an adult conversation about the best way to pay for it. But for what may be the first time in recent memory, we find ourselves agreeing with the Carroll commissioners: Perhaps it’s best to leave well enough alone.

Read the Sun’s editorial online.

Prince George’s Clarifies Local Hotel Tax

The Prince George’s County Council enacted a local law earlier this week to clarify the taxes remitted on hotel rooms booked through online travel companies. The Prince George’s County Council Report described the bill as follows:

An Act concerning the Hotel and Motel tax will clarify the taxable amount for calculation of the County’s hotel and motel tax due from a room re-marketer. As proposed the Bill will simply close a loophole in the current law that has been exploited by out of state online travel companies who unlike hotels in Prince George’s County are not remitting the full amount of hotel occupancy taxes collected from lodging consumers who book Prince George’s County hotel and motel rooms through online travel companies.

The Maryland Hotel and Lodging Association and the Gaylord National Resort and Conference Center both supported this legislation.

A similar issue is being debated before the Maryland General Assembly this session. SB 190, would impose a State Sales and Use Tax on the full price paid to an online travel website for the cost of a hotel room, not the wholesale rate the travel website pays to a hotel. MACo offered amendments to include local hotel taxes in the scope of the bill, but was unsuccessful.

For more on MACo’s 2015 legislation, visit the Legislative Database.


House Pledges Focus on Stormwater Bill in High Profile Hearing

The continued debate on state-mandated stormwater fees again took center stage as SB 863 was heard in the House Committee on Environment and Transportation. The Committee Chair, Delegate Kumar Barve, indicated to bill sponsor and Senate President Mike Miller his commitment that the bill was his “top priority” and than a bipartisan effort would be underway to improve it.

MACo testified on the bill, offering amendments to several areas but advocating for a “seat at the table” for continued discussion and negotiations.

From the Baltimore Sun coverage of the hearing:

The Senate president’s bill would make the fees optional, but it also would require local officials report publicly on what projects they’re planning to reduce polluted runoff, and how they intend to pay for them. They’d have to report their progress annually, and if the Maryland Department of the Environment finds their plans or progress lacking, could withhold state funds for a variety of environmental projects.

Officials with the Maryland Association of Counties, though, told committee members that Miller’s bill was too stringent. They asked for amendments reducing how often local governments have to report their progress, and easing the standards by which state regulators judge whether local governments are doing enough to reduce stormwater pollution. They also warned that the bill’s threat of withholding state funds could jeopardize counties’ bond ratings, causing serious fiscal problems for local governments and their taxpayers.

Read the full Sun coverage.

Senate Committee Takes Action on Administration’s Tax Relief Proposals

A Senate Committee voted Friday on four of the Administration’s proposals for tax relief, voting down one proposal and voting the other three favorable with amendments. As reported by the Washington Post,

The Senate Budget and Taxation Committee killed a bill that would have exempted police, firefighters and other first responders from paying income taxes on a chunk of their pensions. It significantly watered down bills that would have halted automatic increases in the state gas tax, eliminated personal property taxes for some small businesses and exempted all military retirement income from being taxed.

As introduced HB 483/SB 589  would have repealed the inflationary increases on the gas tax and future adjustments in the sales tax imposed on the price of gasoline.

The Senate committee stripped out of the gas-tax bill a provision that would have halted automatic increases scheduled to take place every year as well as other provisions that also would have decreased revenue the state is planning to use for transportation projects.

They left — and approved — one part of the bill: lowering the cap on inflation-related increases in the gas tax to 3 percent instead of 8 percent.

An article in the Baltimore Sun summarizes the changes to the other Administration bills.

Hogan had also proposed exempting all income from military and first-responder pension plans from taxation. That idea, too, seemed doomed from the start as House Speaker Michael E. Busch questioned whether it would open the door to other groups seeking exemptions.

On the military pensions bill, it stripped away Hogan’s language and substituted a measure that has passed the Senate twice before — raising the state’s existing exemption on military pensions from $5,000 to $10,000 for those over 65.

The governor’s bill to relieve small businesses of the burden of paying the personal property tax fared somewhat better. The panel approved Hogan’s proposal to exempt a company’s first $10,000 in business equipment from that tax, which is collected by local governments. However, senators delayed its impact to July 1, 2017, and made the law contingent on improvements in the state’s tax assessment system.

MACo opposed HB 480/SB 590, which as introduced, would have mandated local governments to provide a personal property tax exemption for businesses with personal property of a total assessed value of $10,000 or less.

MACo did not take a position on a SB 31 /HB 177  which would also expand the existing military retirement exemption to $10,000 for those age 65 and 65.

President: Senate Considering Tax Relief Proposals

While debating the Senate’s budget plan on the floor this morning, Senate President Mike Miller indicated that he wants to work with Governor Hogan on some of his tax relief proposals. This suggests that at least one of the Governor’s bills, still in their Senate committee, could pass in the days ahead.

As reported by the Associated Press and published in the Washington Times,

Miller said he wanted to work for a personal property tax exemption backed by Hogan. He also said lawmakers will consider reducing an automatic increase the state’s gas tax to adjust for inflation – a tax Hogan has targeted. Miller, who adamantly opposed touching the gas tax increase seven weeks ago, said he would now be open to downsizing the automatic increase to a point where it would only be increased by a small amount each year.

It seems this would be as part of a compromise on the Governor’s proposed FY 2016 budget. Both the House and Senate budget plans have restructured or identified funds within the budget and redirected them to specific programs or initiatives. However, these funds can’t be spent on these items unless allocated by the Governor through a supplemental budget.

The state budget, which already has passed the House of Delegates, restores scaled back funding in Hogan’s initial proposal in January, as well as a 2 percent cost-of-living adjustment for state employees.

However, Hogan will still need to approve those changes for them to take effect.

“He’s going to do that, but there’s an understanding also from the governor that we’re going to look at his agenda and move some of his agenda forward,” Miller said during the session as senators considered the budget legislation.

For more information on the proposed FY 2016 budget and the House and Senate budget plans, see our previous posts on Conduit Street.