2015 End of Session Wrap Up: Tax & Revenue – Property Tax Related Legislation

This post summarizes the status of tax and revenue bills related to the property tax that MACo took a position on during the 2015 General Assembly Session.

Personal Property Tax: HB259 would mandate a five-year cap on the county personal property tax rate imposed on many small businesses. This cap would apply to small businesses with revenue of less than $100,000 that organize or relocate in the State during the current tax year.

HB 446 would mandate local governments to exempt personal property from the personal property tax for a five-year period if the property is purchased on or after July 1, 2015. This mandated exemption would apply to businesses with revenue of less than $100,000 during the taxable year.

HB 480/SB 590, introduced on behalf of the Administration, would mandate local governments to provide a personal property tax exemption for businesses with personal property of a total assessed value of $10,000 or less. Both bills would also exempt these businesses from filing a personal property tax report and paying the annual filing fee. In addition, the bill would fully offset the revenue loss to local governments in the first year, phasing out the offset over three years.

As amended by the Senate, SB 590 would provide for the personal property tax exemption, but small businesses would need to apply for the exemption and still pay the annual filing fee. The personal property tax exemption was also made contingent upon an outside audit of personal property tax assessments. The Board of Public Works would be required to approve a contract for an entity to perform the audit by April 1, 2016.

MACo opposed these bills as they mandate a reduction in county personal property taxes without any local action or input. Counties believe that incentives and reductions in local tax rates or bases should be a local decision, and MACo resists proposals that automatically effect such changes across each county.

FINAL STATUS: HB 259 and HB 480 were heard by the House Ways and Means Committee, but no further action was taken. HB 446 was withdrawn by the bill sponsor.

SB 590 passed the Senate and a hearing was held in the House Ways and Means Committee, but no further action was taken.

MACo Testimony HB 259
MACo Testimony HB 446
MACo Testimony HB 480 and SB 590

County and Municipal Property Tax Setoffs: HB 690 would impose a one-sided mandate on each county and municipal government to negotiate property tax setoffs to the complete satisfaction of both parties.

MACo opposed the bill as it would overturn decades of state law, derived through local deliberation and each county’s delegation support, and place all counties into one strict law, making the tax setoff mandatory instead of optional.

FINAL STATUS: HB 690 was heard by the House Ways and Means Committee, but no further action was taken.

MACo Testimony HB 690

Application Repeal – Homestead Property Tax Credit: HB 996/SB 375 would repeal the application requirement for the Homestead Property Tax Credit.

MACo opposed the bill as the application has improved the administration of the program and provides a verification mechanism to ensure only eligible homeowners are receiving the credit. Abuse of the Homestead Credit is unfair to other taxpayers, as it depresses the tax base beyond the targeted intent of the policy.

FINAL STATUS: HB 996 was heard by the House Ways and Means Committee, but no further action was taken.  SB 375 was voted unfavorable by the Senate Budget and Taxation Committee.

MACo testimony HB 996 and SB 375