The Maryland House of Delegates has passed HB 23 – Property Taxes – Authority of Counties to Establish a Subclass and Set a Special Rate for Commercial and Industrial Property, a significant step forward in providing counties with a new, targeted tool to address rising costs for transportation and education.
HB 23 addresses a priority initiative of Maryland’s 24 county governments. It gives counties a focused tool to manage growing demands for infrastructure and education by allowing limited flexibility with local revenue structures. The bill takes a balanced approach to supporting essential services, addressing community priorities, and encouraging sustainable growth.
After advancing from the Ways and Means Committee and clearing the House, HB 23 now moves to the Senate, with MACo’s strong support for providing counties the flexibility needed to meet local infrastructure and education funding demands.
Why It Matters
HB 23 aligns with MACo’s Legislative Initiative responding to counties’ urgent fiscal needs amid historic funding obligations under the Blueprint for Maryland’s Future and a severe shortfall in local transportation funding.
Counties maintain most of Maryland’s road network but lack sufficient resources to keep up with its rising transportation maintenance costs.
Once a reliable funding source for local transportation projects, Highway User Revenues remain far below historic levels. This funding gap forces counties to stretch limited resources to maintain roads, repair bridges, and address aging infrastructure needs.
At the same time, education costs under the Blueprint for Maryland’s Future continue to increase, with counties already providing $1.3 billion above mandated spending. These rising education costs strain county budgets, limiting funding for other critical services.
The bill provides counties with a carefully structured option to set a separate property tax rate for commercial and industrial properties — mirroring municipalities’ authority but with stricter guardrails. With clear guidelines and express approval from the General Assembly, this approach ensures fairness, accountability, and a dedicated focus on funding essential services like transportation and education.
How It Works
The bill allows, but does not require, counties to establish a separate tax subclass for commercial and industrial properties to fund:
- Critical transportation improvements
- The local share of school funding mandates
To ensure fairness, residential portions of mixed-use buildings are exempt, and caps prevent excessive rates on businesses. In addition, the bill authorizes counties to adopt a local property tax credit for specified small businesses. This approach gives counties a precisely tailored mechanism to balance community needs with fiscal responsibility.
What’s Next?
HB 23 provides a fair, responsible solution for counties to manage growing demands while maintaining strong schools, reliable infrastructure, and sustainable economic growth.
The Senate Budget and Taxation Committee will consider the bill but has not scheduled a hearing yet. MACo will continue advocating for its passage to ensure counties have the flexibility to meet their residents’ needs.
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