Kevin Kinnally, Associate Director of MACo, offered testimony to the Ways and Means Committee on February 12th in opposition to HB 264 – Homestead Property Tax Credit – Calculation of Credit for Dwelling Purchased by First-Time Homebuyer.
This bill opens up property tax savings under the Homestead Property Tax Credit to be “transferrable” to homebuyers purchasing their first home in Maryland. HB 264 holds the potential of costing counties millions of dollars in revenue that is often used to fund essential local services and programs.
From the MACo testimony:
…The Homestead Property Tax Credit acts to essentially cap assessments of owner-occupied residences, so that a resident’s property tax burden does not increase too substantially over the prior year. It provides consistency for taxpayers who live in and own their homes. Nearly every county has exercised their authority to lower their caps, providing security to homeowners beyond that which is required by the State.
However, if the tax credit were expanded to all homes transferred to new homeowners, counties could lose up to $12 million from their most reliable revenue source by fiscal 2024, according to the bill’s fiscal note. This is county revenue sorely needed to fund public safety, schools, infrastructure, and other essential services. Counties could be forced to eliminate their expansions of the Homestead Property Tax Credit altogether where feasible – or, potentially, cut budgets for crucial public services.
It deserves noting that the bill’s fiscal note is based on one year’s sales data, fiscal 2018, and that several factors can impact the year-to-year revenue effect of the bill. For example, the fiscal note for HB 1445 of 2018 (the earlier introduction of the current HB 264) used data from fiscal 2017 and projected local property tax revenue losses of $85 million by fiscal 2023…
For more on 2019 MACo legislation, visit the Legislative Database.