MACo Submits Letter to Augustine Commission on County Role, Revenues and Funding Relationship

MACo submitted comments this week to the Maryland Economic Development and Business Climate Commission, otherwise known as the Augustine Commission, to help members better understand the role of county governments, their revenues and the state and local funding relationship. As the Commission deliberates over Maryland’s business tax and incentive structure, many of the recommendations could negatively affect county revenues and economic incentive programs that work well in the counties.

From the MACo letter,

County governments touch the lives of all Marylanders. They are the primary unit of local government for the overwhelming share of residents, and provide the following direct services to citizens: police, fire, local corrections, sanitation, local roadways and bridges, health, and recreation and parks. In addition, counties provide an enormous share of funding for K-12 education, community colleges, and libraries (more so than in most states).

Many of the tax proposals offered by the business community at the Commission’s September 10 meeting would significantly reduce property and income tax revenues, which make up approximately 86% of local own source revenues. The letter provides more detail on how real and personal property tax rates and county income tax rates are set; and discusses consequences of state mandated tax cuts.

MACo believes counties have a role to play in improving the state’s business climate, but advocates for a balanced approach that would not result in shifting the tax burden onto the counties, or simply shifting from one revenue source to another.

MACo prefers approaches to tax incentives that preserve local government autonomy. During the session, MACo adopted a statement which explains MACo’s position on tax incentive proposals and its preference that State proposals affecting local revenue sources be enacted as a “local option.” It still believes this approach would give counties maximum flexibility to achieve local goals.

Lastly, the letter touched on the revamping of business tax incentive programs. County economic development directors presented before the Commission last interim offering their suggestions for how the State can better support local economic development efforts. These suggestions included flexible grants and incentive tools, workforce training, and interdepartmental cooperation across state agencies. A joint statement from MACo and the Maryland Municipal League was attached to the letter.

The Commission is scheduled to meet again on October 2 to discuss higher education funding and costs; and begin discussing potential recommendations. A final report with recommendations is expected in December.

Prior coverage of the Maryland Economic Development and Business Climate Commission can be found on Conduit Street.