The House Ways and Means Committee will convene an interim study to examine Maryland’s antiquated, inefficient, and confusing constant yield tax law.
The Constant Yield concept is that, as assessments rise, the tax rate should drop to the point that the revenue derived from the property tax stays at a constant level from one year to the next. Because property assessments typically grow in value, constant yield rates are generally lower than the previous year’s actual tax rate.
Under current law, local governments must advertise and hold public hearings on proposals to enact a tax rate that exceeds the constant yield rate – even if the actual rate remains unchanged. Because the statute requires the advertisement to include “Notice of Tax Increase,” constituents often do not understand that a county has simply adopted the same tax rate that had been in effect and that the notice is solely a function of a statutory requirement.
Counties are interested in providing residents with a more efficient, accurate, and transparent overview of local policy decisions and deliberations. MACo testified in support of two bills (HB 445/SB 543 and HB 508) that would make necessary and timely changes to outmoded provisions of Maryland’s constant yield tax law. The House Ways and Means Committee referred HB 445 to an interim study.
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