MACo Associate Director, Barbara Zektick, testified in support of House Bill 1433, “Local Income Tax Overpayments – Local Reserve Account Repayment – Forgiveness,” which repeals the requirement that local governments must reimburse the Local Income Tax Reserve Account for overpayments of local income tax revenue distributions made by the Comptroller. This bill allows for funds to be drawn from the Account, rather than local government budgets, to rectify errors for which they are not responsible.

Over this past year, due to an issue concerning misclassified addresses, the Comptroller’s Office has identified $21 million in local income tax revenues which were distributed to counties and municipalities incorrectly for tax years 2010-2014 – resulting in overpayments to some local governments and underpayments to others.

MACo’s testimony states,

MACo supports this bill because it alleviates local governments from bearing the burden for unpredicted liabilities due to no fault of their own. Such liabilities could potentially compromise a local government’s ability to provide funds for needed programs and services.

The cross-file to the bill, SB 397, was heard by the Senate Budget and Taxation Committee on February 15, 2017. It passed the Senate unanimously, with an amendment to require the Comptroller to reimburse any local government which has already made a repayment.

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Follow MACo’s advocacy efforts during the 2017 legislative session here.