End of Session Wrap Up: 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: HB 83 failed in the House Ways and Means Committee and SB 740 failed in the Senate Budget and Taxation Committee.  However, similar provisions have been included in the Maintenance of Effort legislation, HB 1412 and SB 848.

Testimony HB 83
Testimony SB 740

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:  HB 128 failed 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.

Testimony HB 128

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.  Considering the complexity associated with establishing a fund for this purpose, both bills have been amended to establish a workgroup to this study this issue.  Status:  HB 472 has passed the General Assembly and is awaiting the Governor’s signature. SB 873 failed on in the House. 

Testimony HB 472
Testimony SB 873

Telecommunications Reform Commission: As introduced,  HB 563/SB 567 would have established 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 passed the General Assembly with MACo’s amendments and are awaiting the Governor’s signature.

Testimony HB 563
Testimony SB 567

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 General Assembly and is awaiting the Governor’s signature.

Testimony HB 592

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 General Assembly and is awaiting the Governor’s signature.

Qualified Distressed Counties: HB 1289 would expand the definition of “qualified distressed county” and allow a business to receive a prorated share of the One Maryland Economic Development Tax Credit as long as the business maintains a certain number of qualified positions for a specified time frame.  MACo supported this legislation to assure that the current “qualified distressed counties” (Allegany, Caroline, Dorchester, Garrett, Somerset, and Worcester and Baltimore City) continue to benefit from these types of programs, as well as bring in two additional counties, Washington and Cecil.  Status:  HB 1289 has passed the General Assembly and is awaiting the Governor’s signature.

Testimony HB 1289

Property Tax Exemption for the BlindSB 6/HB 976 would expand an existing property tax exemption for blind individuals or their surviving spouses by increasing from $15,000 to $30,000, the amount of the assessed value of the individual’s home that is exempt from property taxes. MACo opposed this legislation for fiscal reasons.  Status:  SB 6 has passed the Senate, but failed in the House Ways and Means Committee.  HB 976 failed in the House Ways and Means Committee.

Testimony SB 6
Testimony HB 976

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 withdrawn by the sponsor.

Testimony SB 218

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