HB 2 was passed this session, to authorize counties to create a special property class, and tax rate, for property found to have been abandoned or otherwise left vacant. MACo had supported such a tool, looking toward multiple angles to help address the affordable housing challenge facing Maryland and most of the United States.
HB 2 was introduced as a local Baltimore City only bill, but following the House Ways and Means Committee hearings on this and some related bills, the Committee heeded MACo’s call for this tool to be available widely, and amended it to have statewide effect. The final enrolled bill is now awaiting the Governor’s signature to be enacted into law.
The initial essence of HB2 is the authority to create a new class of property, in its main body:
This statutory authority is necessary since the Maryland Constitution includes a uniformity clause regarding taxation of property — citing a requirement that tax rates be even across any “class” of property. The law creating a local option to define abandoned properties as a new class opens the door for a differential tax rate to be applied to them.
The back end of the bill includes the main definitions and implementation process:
Counties wishing to use this new tool to target housing challenges may do so as soon as the coming fiscal year (assuming the bill is signed into law), as the bill has a Jule 1 effective date.
HB 2 represents a step in a different direction for Maryland’s property tax policy – modestly embracing some of the philosophy of a broader movement often referenced as “land value taxation.” That view suggests that taxing improvements (buildings and their value as structures) creates a disincentive to maximize use of available land – and to remedy this disincentive, governments should levy taxes mostly, or exclusively, on the value of the land itself. A stepped-up tax on vacant properties does not go this far, but adopts some of the same incentive-based concepts of this movement. For more on land value taxation, visit the Local Housing Solutions website for a more thorough treatment of the topic.
For more on HB 2, read the General Assembly’s fiscal and policy note detailing the bill’s practical effects.
