Local Income Tax: Sluggish Growth Continues

August 1, 2014

In the latest distribution of local income taxes, as reported by the Office of the Comptroller, the June withholding of county income taxes continues to grow at a modest pace, just over 3% from the prior year. The distributions of income tax are complicated by various factors (interest and penalties, reserve accounting, and reconciliation of prior estimates) but the core movement in the income tax supports the impression of Maryland’s economy and workforce remaining in a modest growth period.

From the Comptroller’s message to county finance officers and stakeholders:

Withholding attributable to June is expected to be $876.0 million, 3.1% greater than last June’s projection. After accounting for the unallocated and refund reserve percentages as well as the local tax percentage and the cost of administration, the June withholding distribution increases 1.6% to $250.4 million. The reconciling distribution will be made in August, when actual collections for the entire second quarter (April/May and June) are known.


Congress Reaches Agreement On Temporary Funding Plan For Transportation

August 1, 2014

With the federal highway trust fund nearing insolvency, Congress reached agreement on a $10.8 billion plan to fund the federal governments share of road and bridge transportation projects through May 2015. President Obama is expected to sign the legislation.

While states, transportation advocates, and others are pleased that this plan will enable the federal government to continue to reimburse states for surface transportation projects and save jobs, they have also made it clear that this “fix” is only temporary.  As reported by Better Roads,

Now that Congress has patched a temporary fix, it is extremely important to work out a long-term agreement. Without a multi-year deal, states are hesitant to start any major road projects in fear of funding running out before completion.

To learn more about federal funding for infrastructure projects and other policies, join us during the MACo summer conference.  Representatives from Senator Barabara Mikulski’s and Congressman John Dulaney’s office will join us to discuss their legislative efforts and more.  This session titled “Federal Funding for County Causes: Partnering  With Your Members of Congress” will be held on Friday, August 15, 2014 from 1:00 pm to 2:00 pm.

Jessica Monahan, the National Association of Counties Associate Legislative Director for transportation policy will also discuss federal transportation issues on a panel titled “Creative and Collaborative Transportation Solutions to Meet Citizen Needs” being held on Thursday, August 14 from 3:30 pm to 4:30 pm.

Learn more about MACo’s 2014 Summer Conference:

Contact Meetings & Events Director Virginia White with questions about Summer Conference.

Property Assessment Workgroup Holds Second Meeting

August 1, 2014

The State Department of Assessments and Taxation Property Assessment Workgroup held its second meeting on July 28 to hear from vendors offering photo imagery and auditing services. Photo imagery would assist with real property assessments, while the auditing services would focus on the reporting and assessment of business personal property. The group also briefly discussed data being gathered for the next meeting and subcommittee assignments.

The workgroup, which is required by SB 172, the Budget Reconciliation and Financing Act of 2014, will look specifically at the following issues:

  1. Whether a physical exterior inspection of each property is necessary to properly assess real property for tax purposes;
  2. The Department’s ability to timely and adequately maintain changes in property status that may occur throughout the year and incorporate new properties in the system of accounts;
  3. The extent of discrepancies in the calculation of certain tax credits and exemptions and approaches for improving accuracy; and
  4. The feasibility of, and any legal impediments to, contracting with a third-party vendor to perform periodic audits of the property tax credit and exemption programs for which the Department calculates the credit or exemption or of other functions for which an external evaluation may provide greater accuracy.

To carry out its work, the workgroup plans to break into four subcommittees, one for each issue area. The full workgroup will meet again towards the end of August to review data and then the subcommittees will begin their work.

MACo’s representatives include:

  • Joseph Beach, Director of Finance, Montgomery County
  • Jason Bennett, Director of Finance, Allegany County
  • Kathryn Hewitt, Treasurer, Harford County
  • Linda Watts, Assistant Director Finance, Office of Business Management and Customer Service, Howard County

The Workgroup is to submit a report of findings and recommendations to the Governor and General Assembly by December 15, 2014.

Prior coverage of the Workgroup can be found on Conduit Street.

A Conversation with Governor Glendening at MACo’s Summer Conference

July 31, 2014

Governor Parris N. Glendening

As Governor of Maryland from 1995-2003, Glendening promoted tax reform, economic development, and environmental protection. Prior to becoming Governor, he was a local elected official in many capacities: a city Councilman in Hyattsville; a Council Member in Prince George’s County; the County Executive in Prince George’s County for three consecutive terms; and President of MACo from 1986-1987.

Join Governor Parris N. Glendening for his reflections on his years of service and his insight into today’s policy areas of interest for county governments.

The discussion will be moderated by Phil Tilghman, former Wicomico County Council Member and public access TV host, whose “One on One” program regularly explores topics with Eastern Shore public figures.

Date/Time: Friday, August 15, 2014 from 2:15 – 3:15 pm

Learn more about MACo’s 2014 Summer Conference:

Contact Meetings & Events Director Virginia White with questions about Summer Conference.


Federal Update – Bill Extends Sales Tax to Internet Sales, Moratorium on Taxing Internet Access

July 23, 2014

A new bipartisan bill, the Marketplace and Internet Tax Freedom Act (MITFA)(S.2609), was recently introduced in the U.S. Senate addressing two issues of interest for county governments. From the National Association of Counties (NACo) Legislative Update:

  • It includes the Marketplace Fairness Act (MFA) as passed by the Senate in 2013 with a few minor technical corrections. MFA allows state and local governments to enforce existing sales taxes on remote sellers.
  • Provides a ten-year extension of the Internet Tax Freedom Act (ITFA). ITFA prohibits counties from collecting a tax on Internet access (typically a subscription service) until November 1, 2014. While a 10-year extension is not the best case scenario for counties, it is better than the House proposal (H.R. 3086) for a permanent extension.

According to the Update,

The Marketplace Fairness Act, which was passsed by the U.S. Senate in May, 2013 with broad bipartisan support (69 Yeas – 27 Nays), would grant authority to state and local governments to enforce existing sales and use tax laws on remote sellers. The bill would not create a new tax, but would create a level playing field for retailers regardless of their choice of venue and would grant collection authority only after states have simplified their sales tax laws.

As previously reported on Conduit Street, for Marylanders, this federal legislative change 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 only if federal legislation fails to extend the sales tax to remote sellers.

The  Internet Tax Freedom Act established a moratorium that has been extended three times to prohibit state and local governments from collecting a tax on internet access. The MITFA would extend this moratorium for another 10 years. Other efforts, the Permanent Internet Tax Freedom Act (H.R. 3086), would permanently prohibit state and local governments from taxing internet access.

NACo opposes this bill because the Congressional Budget Office (CBO) has reported that removing the grandfathered states would deprive those states and local governments of several hundred million dollars annually and thus would be an unfunded mandate. Additionally, permanently extending ITFA would preempt an entire, fast-developing industry from taxation. Many services including cable and telecommunications services will transition to broadband, resulting in a significant expansion of the scope of services that ITFA will shield from state and local taxation.


2014 Summer Conference Session: Counties Going Green – A Guide to Sustainable Purchasing

July 22, 2014

As companies continue to make more environmentally friendly products, purchasing officials must have the proper skills to evaluate these products in terms of cost and effectiveness. This training session will offer best practices for sustainability and help you select products that offer the best value, not only in terms of cost and performance, but for the health of fellow employees and our environment.

Speaker: Anne Jackson, Sustainability Officer, Maryland Department of General Services

Moderator: The Honorable Steven J. Arentz, Maryland House of Delegates

Date & Time: Friday, August 15, 2014; 2:15 pm – 3:15 pm

Learn more about MACo’s 2014 Summer Conference:

Contact Meetings & Events Director Virginia White with questions about Summer Conference.

Cecil County to Debate Assessment Cap Under Homestead Tax Credit

July 21, 2014

Cecil County Councilwoman Diana Broomwell recently introduced legislation to reduce the assessment cap under the county’s Homestead Tax Credit program from 8% to 4%. As reported  by the Cecil Whig,

The policy, known as the Maryland Homestead Tax Credit, was designed to help homeowners deal with large assessment increases on their principal residence during times of escalating home prices.

The state has set this limit at 10 percent for its portion of the tax bill. However, counties and towns are allowed to reduce their portion below 10 percent of the tax bill.

In simple terms, a credit is applied to assessments that go up at a rate of greater than 10 percent to bring it down to 8 percent for tax purposes, not actual market value.

For example, if an old assessment was $100,000 and a new phased-in assessment for the first year is $120,000, then limiting the increased assessment to only 10 percent would translate to $110,000.

That difference of $10,000 is the amount to which the tax credit would apply.

The Council will discuss the fiscal effects of this legislation during a public hearing scheduled for August 19, 2014 at 7:00 pm.  If the legislation passes, it would take effect July 1, 2015.


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