It looks like counties and municipalities owing income tax reimbursements due to the Comptroller’s recent misallocations may get a break. House Bill 1433, “Local Income Tax Overpayments – Local Reserve Account Repayment – Forgiveness” passed second reader in the House today, with amendments. This bill 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.

The amendments require the Comptroller to repay any reimbursements already paid by counties and municipalities. The Senate has already passed the crossfile, Senate Bill 397, with this amendment.

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 supported this bill. From MACo’s testimony:

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.