DLS: Fully Fund Disparity Grant Formula

The Department of Legislative Services, in its budget analysis of Payments to Civil Divisions of the State, is recommending that the General Assembly concur with the Governor’s formula-driven fiscal 2020 allocation of $146,172,853 for disparity grant funding.

For fiscal 2020, the grants to Baltimore City and Caroline, Cecil, Prince George’s, Somerset, Washington, and Wicomico counties all increase.

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The Disparity Grant Program provides noncategorical State aid to low-wealth jurisdictions for county government purposes. Disparity grants address the difference in the abilities of counties to raise revenues from the local income tax, which for most counties is one of their larger revenue sources. The Budget Analysis explains how that formula works.

Increases in the disparity in the per capita tax yield compared to the statewide average were the primary reason for the increases in disparity grants in those counties that saw an increase. The exception is Caroline County that sees a $1.2 million increase due primarily to the county increasing its income tax rate to 3.2% for calendar 2019, which means that it receives 67.5% of the uncapped grant amount, rather than 40%.

Last year, the Department recommended cutting disparity grant funding by $2.7 million. MACo advocated against the cuts and ultimately the proposal was defeated.

Useful Links

Fiscal 2020 Analysis: Payments to Civil Divisions of the State

2018 End of Session Wrap-Up: Disparity Grants

Caroline Raises Income Tax Rate

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