Continued County Disparity Grant Funding Promotes Tax Fairness

MACo Executive Director Michael Sanderson testified to the House Appropriations Committee February 27, 2020 to support HB 737 – Local Governments – Income Tax Disparity Grants – Amounts. This bill extends by two years a temporary enhancement of disparity grant funding for six counties with proven local income tax effort: Caroline, Dorchester, Prince George’s, Somerset, Washington, and Wicomico. Disparity grant funding provides much needed revenues to counties with limited revenue generation potential to help fund necessary services such as public safety, schools, infrastructure, and community services.

From the MACo Testimony:

The disparity grant program promotes fiscal equity by providing noncategorical State aid to less affluent counties with proven local income tax effort. The program serves to ensure that counties, who rely on local income taxes for substantial revenue, are able to generate sufficient yield to fund education, public safety, roadway maintenance, and community services.

Recent years have seen State-imposed “caps” in this program that artificially lessen the effective revenue from such jurisdictions, including those who have exercised the maximum county income tax rate. Over the past five years, cap provisions have reduced State funding under the disparity grant program by approximately $233 million.

Follow MACo’s advocacy efforts during the 2020 legislative session on MACo’s Legislative Tracking Database.