September Local Income Tax Distribution Up 40% From Last Year

The Office of the Comptroller released its detail of the September distribution of local income taxes.  According to the electronic message, “The September distribution totals $71.2 million, a 39.7% increase from last year.” This distribution is composed of the adjusted final distribution and the disparity grant.  From the electronic message:

As shown in Table 1 , the September distribution to counties totals $71.2 million, an increase of 39.7% from last year.  Table 2 shows the nearly 40% increase in the distribution, although nine counties experienced a decline from last year.  Only three counties are not receiving a distribution, a change from the nine counties that did not receive a distribution last September.

The September adjusted final distribution (Table 2A ) reflects revenues attributable to tax year 2010 claimed on returns processed between July 1 and September 1, 2011, reconciled to prior distributions for tax year 2010.  This distribution was almost exactly double last years, which itself was 86% above the September 2009 distribution.  This distribution is volatile due to the small number of returns received over a short period of time.  The strong growth is in part due to taxpayer behavior, reflecting the fact that estimated payments throughout tax year 2010 were apparently based on the prior years liability, resulting in strong growth in payments with returns.  This was, unsurprisingly, experienced at the State level as well.

This distribution also includes the first quarterly payment of the disparity grant for fiscal year 2012 (Table 2B ).  The amounts distributed to the specified counties and Baltimore City are detailed in the budget bill of the previous legislative session.

Statewide, net local tax liability for tax year 2010 has increased by $161.9 million, growth of 5.1% (Table 3 ).  In sharp contrast to last year, when only four counties experienced an increase in local income tax liability, all but two have seen an increase this year.  The broader recovery shown by Table 3 is reflected in Table 4 as well, since the number of returns accounted for in the September distribution has declined by 1.1%, but the dollars accounted for in the distribution increased by over 100%, the average liability per return has increased substantially. Table 4A shows the number of returns filed for the tax year, with growth of 1.3% after last years recession-induced 1.8% decline-again demonstrating the modest economic recovery that unfolded throughout calendar year 2010.

If you have any questions about the August 31 distribution, please contact Judith Oberist of the Revenue Administration Division at (410)260-7606.

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