Legislative Analysts: Shifting SDAT Costs To Counties Unwise

At today’s hearing on SB 187, the Budget Reconciliation and Financing Act of 2018 (“BRFA”), Department of Legislative Services (DLS) analysts recommended striking the provision which would shift 90 percent of costs for certain State Department of Assessments and Taxation (SDAT) functions onto the counties – concurring with MACo’s suggested amendment to delete this provision from the BRFA.

As introduced, the bill would shift nearly all costs for SDAT’s property assessment, information technology and Office of the Director costs onto the counties. Currently, counties fund 50 percent of assessment and information technology functions. The cost shift would have placed an additional $20 million on the backs of county budgets.

From the DLS analysis on SDAT’s operating budget:

The Department of Legislative Services (DLS) recommended against this proposal when it was offered in 2017. While it is true that local jurisdictions are the primary recipients of revenue based on the work of SDAT, this does not necessarily mean that it is wise to place the cost burden on those local governments. The State and its citizens benefit from the uniformity in procedures and valuations produced by SDAT as well as the unity of the appeals process. Assessors from all jurisdictions benefit from having greater access to support and other resources that may not be available to them otherwise.

As long as budget decisions for SDAT are made at the State level, it is prudent to require the State to pay a large share of these costs to maintain an incentive to make wise budget decisions. While there is no evidence that the current administration of SDAT or DBM would be less careful in their fiscal stewardship if more funding comes from local governments, there is still a risk going forward of creating a large area of expenditure in the budget that the appropriators do not have to fund. DLS recommends that the current 50-50 cost share for assessment expenses be maintained and that the provision increasing the local cost share to 90% be stricken from the BRFA of 2018.

MACo President Jerry Walker (Council Vice Chair, Anne Arundel County) testified:

This not only imposes a $20 million cost burden onto Maryland counties. It also threatens the objectivity and transparency of a good government system that has served our state well for decades. It’s important – and unique to Maryland – to have property assessment functions managed and funded by a jurisdiction that does not directly, meaningfully benefit from the size of those assessments.

It keeps the fox out of the henhouse.

By having counties – the biggest beneficiary of those assessments – fund their work, it places that objectivity into question.

MACo Legislative Committee Member Michael Mallinoff, Charles County Administrator, testified:

I cannot do my job to make sure our taxpayer dollars serve them effectively if my county doesn’t have any oversight for the programs they pay for. Shifting the costs for SDAT onto the counties would eliminate any incentive for the State Administration to make wise budget and management decisions.

Regardless of what decisions they make or how much they spend, they will always receive a blank check from our constituents. This is not a move in the direction of good government, transparency, or accountability.

Read MACo’s testimony here.