Tax Credits an Alternative to Depleting County Coffers

MACo submitted written testimony in opposition to House Bill 296, “Income Tax – Subtraction Modification – Retirement Income of Correctional Officers”, to the Senate Budget and Taxation Committee on March 28, 2018.

This legislation is among a number of subtraction modification bills that would mandate reductions in local revenue by reducing an eligible individual’s taxable income. Due to the clear fiscal impact that these modifications would have on local governments and their ability to provide needed community services, counties generally oppose such changes.

Additionally, the effects from federal tax reform on local and county government revenues remain uncertain.

From MACo Testimony:

HB 296 is just one of many bills that have already been introduced this session to reduce or adjust the income taxes paid by residents of Maryland. According to the bill’s fiscal note, local revenues would decline by approximately $1 million in fiscal 2019. However, it is not clear from the fiscal note whether the thousands of local and federal correctional officers are included in that estimate. Nevertheless, this revenue effect combined with that of other bills already introduced this session, simply cannot be afforded as a statewide county mandate and could present substantial budget difficulties. This is exacerbated by the fact that counties do not know yet just how tax reform will affect their revenues.

MACo suggests that consideration be given instead to providing state tax credits, which do not mandate the depletion of resources from all counties for education, public safety, and needed community services.”

For more on this and other legislation, follow MACo’s advocacy efforts during the 2018 legislative session here.