Counties Ask for Flexibility with Local Revenues, Certainty for Disparity Grant Program

MACo Legislative Director Kevin Kinnally today testified before the House Ways and Means Committee in support of HB 319 Local Tax Relief for Working Families Act of 2021 with amendments to ensure the State maintains its commitment to the disparity grant program.

This bill provides counties with the proper tools and flexibility to levy the local income tax with greater equity and fairness.

Several county leaders testified in support of the bill, including:

  • Steuart Pittman, Anne Arundel County Executive
  • Marc Elrich, Montgomery County Executive
  • Nick Mosby, President, Baltimore City Council
  • Tom Hucker, President, Montgomery County Council
  • Will Jawando, Council Member, Montgomery County

From the MACo Testimony:

In general, MACo stands for local self-determination. Counties, led by their elected leaders who are directly accountable within the community, are in the best position to make decisions on local affairs – ranging from land use to fiscal matters. HB 319 provides counties with the proper tools and flexibility to levy the local income tax with greater equity and fairness

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 schools, public health, public safety, roadway maintenance, and community services.

The disparity grant formula is calculated based on local income tax rates, whereby less affluent counties with a maximum local income tax rate of 3.2% receive an additional tier of state aid. Counties have made difficult tax rate decisions based on the state law governing these grants – to undermine them would be especially untoward even during times of mutual fiscal strain. Accordingly, MACo insists that the State continues to recognize 3.2% as the required county income tax rate to establish eligibility for the “high effort” tier of the disparity grant program.

Follow MACo’s advocacy efforts during the 2021 legislative session on MACo’s Legislative Tracking Database.