House Subcommittee Votes Down Proposed SDAT Cost Shift

Today the House Appropriations Public Safety and Administration Subcommittee voted unanimously against the Governor’s proposal to shift costs for operating the State Department of Assessments and Taxation (SDAT) onto the counties. With little discussion, Vice Chair Ana Sol Gutierrez moved to accept the Department of Legislative Services (DLS)’s recommendation to  reject the proposal in the  Budget Reconciliation and Financing Act of 2017 (BRFA), and all members of the Subcommittee voted in favor.

The BRFA proposes increasing counties’ reimbursement for SDAT functions including costs of real property valuation, business personal property valuation, and information technology. Since 2013, counties have reimbursed the state for 50 percent of the costs for these functions, but the BRFA proposes increasing this share to 70 percent in fiscal 2018 and 90 percent thereafter. In addition, the BRFA proposes requiring counties to pay for 70 percent of the costs of the Office of the Director in fiscal 2018, and 90 percent thereafter – a cost previously covered entirely by the State.

On February 28 in the House and March 1 in the Senate, MACo testified in opposition to this cost shift. Howard County Finance Department Assistant Director Linda Watts testified that:

…this cost shift requires counties to fund, almost in their entirely, functions over which they have no managerial control. So long as the state does not bear the burden of costs resulting from managerial decisions, the Administration will have no incentive to contain those costs, or ensure management choices are generally fiscally prudent.

The Subcommittee also voted to request that SDAT submit a report by September 1, 2017 to the General Assembly concerning how it conducts classifications of types of sale (arms length versus non-arms length) for certain transactions, “and, more generally, how the assessment process can be made more transparent to property owners and the public.”