MACo Advocates for Local Flexibility in Personal Property Tax Application

MACo Legislative Director Andrea Mansfield testified before the House Ways and Means Committee on February 27 urging members to adopt approaches that would give counties greater flexibility in setting personal property tax rates not reduce county personal property tax revenue with no local input. HB 480, Small Business Personal Property Tax Relief Act of 2015 would provide a personal property tax exemption for businesses with personal property with a total value of  $10,000 or less. The bill also exempts businesses from filing a personal property tax report and paying the annual filing fee.

Although the bill would fully reimburse local governments for lost revenue in FY 2017, this reimbursement would be phased-out and local governments would be required to absorb the loss beginning in FY 2020. As Ms. Mansfield indicated, “State  fiscal constraints and economic realities make it difficult for counties to absorb additional losses, especially while counties face increasing pressure to satisfy State-mandated education funding requirements. MACo would prefer approaches that give counties flexibility in setting tax rates and managing their bottom line.”

MACo recently adopted a broad policy statement which seeks to clarify its general position on tax incentives and local decision-making. MACo’s preference is that proposals affecting local revenue sources be enacted as a “local option.” This approach would give counties maximum flexibility to achieve local goals.

As an example, Ms. Mansfield discussed legislation enacted two years ago to decouple personal property tax rates from the real property tax rate allowing counties to incentivize business investment using a deliberate approach rather than one that is lock-step with the more general real property tax rate. Ms. Mansfield stated, “this approach gives counties flexibility in setting their rates to better tailor economic development strategies to attract businesses and provide funding for needed services.

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