Session Update: Tax and Revenue Legislation

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

Overriding of Property Tax CapsHB 83 and SB 740 would authorize the county council of a charter county to set a property tax rate higher than the rate authorized in the county’s charter. In addition, HB 83 would require a two-thirds vote of the council and SB 740 would require the additional revenue to only be used for the sole purpose of funding the approved budget of the county board of education. MACo opposed the message and precedent of both bills in allowing state policy to override those actions that have been approved by a jurisdiction’s voters.  Status: No action has been taken on these bills in their respective Committees, House Ways and Means and Senate Budget and Taxation.  However, similar provisions have been included in the Maintenance of Effort legislation, HB 1412 and SB 848.

Electing Small Business TrustsHB 128 would close a taxation loophole by imposing the State income tax on the income of an “Electing Small Business Trust” (ESBT) that is derived from stock in an S corporation.   MACo supported this legislation as it would generate additional revenue for the State and local governments.  Status:  No action has been taken on this bill in the House Ways and Means Committee.  However, its provisions have been amended into SB 523, State and Local Revenue and Financing Act of 2012, as it is a part of the House’s revenue package.

Collection of Lead Poisoning Compensation Fee Through the Property TaxHB 472/SB 873 would establish a Lead Poisoning Compensation Fund and assess a fee that residential property owners must pay if their units were built before 1978. The fee would be collected by the county in which the property is located through the property tax. MACo supported the bill with amendments to address the costly, administrative complexities HB 472 would place on the counties to collect the fee through the property tax.  Status:  Both bills have been heard in their respective committees, House Environmental Matters and Senate Finance.  Amendments have been offered and accepted by the House Environmental Matters Committee to change the bill to a Task Force to study the issue.  The Senate Finance Committee is considering the same amendments.  

Telecommunications Reform CommissionHB 563/SB 567 would establish a 13 member Telecommunications Tax Reform Commission to assess the feasibility and fiscal implications for State and local governments of a competitively neutral telecommunications tax and fee system that encourages investment in broadband networks and eliminates the disparate treatment of similar telecommunications service providers.  The bills would also impose a far-reaching moratorium on State and local governments imposing new, or raising existing, telecommunications taxes and fees. MACo offered amendments to eliminate the moratorium; expand representation on the Commission; remove cable franchise and public, education, and government access channel (PEG) fees from the scope of the study commission; and extend the time frame of the Commission’s review.  Status:  Both bills have passed their respective chambers and are being heard in the opposite chamber.

Businesses That Create New Jobs:  HB 592 would extend the time frame that a company may qualify for the enhanced credit of the Businesses That Create New Jobs Tax Credit from 12 years to 24 years.  MACo supported this legislation as a good economic development tool to assist counties with luring large businesses to the area.  Status:  HB 592 has passed the House of Delegates and has been heard by the Senate Budget and Taxation Committee.  Passing is very likely.

Homestead Property Tax Credit Reform HB 1081 would require an individual who has been granted a homestead property tax credit and is subsequently found to be ineligible for the credit to be held liable for the amount of State, county, and municipal property taxes otherwise due and pay a penalty equal to 25% of the amount of the property tax credit improperly received during each taxable year.  MACo did not take a position on this bill, but has been following it closely.  Status: HB 1081 has passed the House of Delegates and has been heard by the Senate Budget and Taxation Committee.

County Income Tax and Imposing on a Bracket Basis: SB 218 would increase the maximum tax rate a county may impose on an individual’s Maryland taxable income to 3.5% and authorize a county to impose the increase to the county income tax rate on a bracket basis. This legislation was introduced to assist local governments with offsetting some or all of the costs associated with the teacher pension shift. MACo expressed its appreciations for the intent, however, it strongly opposes these additional cost shifts to county government and therefore, also opposes any proposals to assist counties with accommodating these costs.  Status:  SB 218 was voted unfavorable by the Senate Budget and Taxation Committee.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Close Menu
%d bloggers like this: