Buried in the House Budget Reconciliation and Financing Act (BRFA) is a costly proposal that threatens to upend the relationship between state and local government.
The plan? Shift 90% of the cost of funding the State Department of Assessments and Taxation (SDAT) onto counties — to the tune of $21.2 million annually. Counties call this what it is: an unfunded mandate that sacrifices good policy for short-term savings.
More information here:
1/ #Maryland’s property assessment system works because it is centralized, impartial, and uniform—promoting fairness and consistency across the State.
However, the proposed budget trades its integrity for negligible budget savings. 🧵#MDPolitics #MDGA25
— Kevin Kinnally (@KKinnally_MACo) January 17, 2025
This proposal doesn’t just strain local budgets. It risks compromising the fairness of Maryland’s property tax system and violates every principle of accountable governance.
No Control, No Oversight — But 90% of the Bill
SDAT performs essential state functions — administering property assessments, managing tax credits, and maintaining a consistent, impartial framework for property tax administration. Counties rely on SDAT to deliver accurate and uniform assessments that form the backbone of local revenue systems.
Under current law, counties fund 50% of SDAT’s budget. However, the BRFA would push that share to 90%, while counties still have no authority over the agency’s staffing, priorities, or operations. That’s a dangerous mismatch — and one that threatens both objectivity and transparency in the tax system.
Impartiality at Risk
This shift isn’t just about dollars — it’s about integrity.
Linking nearly all SDAT funding to counties that benefit from increased assessments could create actual or perceived conflicts. Property assessments must remain above reproach, especially when they determine the tax bills for every resident and business in Maryland.
The State’s Own Analysts Warned Against This
This cost shift isn’t a new idea — and it isn’t a good one. In 2o17 and 2018, the Department of Legislative Services (DLS) warned the General Assembly that shifting more SDAT costs to counties would:
- Eliminate meaningful oversight
- Undermine objective budgeting
- Create incentives for unsound financial decisions
According to the 2018 DLS analysis of the proposed cost shift:
The Department of Legislative Services (DLS) recommended against this proposal when it was offered in 2017. While it is true that local jurisdictions are the primary recipients of revenue based on the work of SDAT, this does not necessarily mean that it is wise to place the cost burden on those local governments. The State and its citizens benefit from the uniformity in procedures and valuations produced by SDAT as well as the unity of the appeals process. Assessors from all jurisdictions benefit from having greater access to support and other resources that may not be available to them otherwise.
As long as budget decisions for SDAT are made at the State level, it is prudent to require the State to pay a large share of these costs to maintain an incentive to make wise budget decisions. While there is no evidence that the current administration of SDAT or DBM would be less careful in their fiscal stewardship if more funding comes from local governments, there is still a risk going forward of creating a large area of expenditure in the budget that the appropriators do not have to fund. DLS recommends that the current 50-50 cost share for assessment expenses be maintained and that the provision increasing the local cost share to 90% be stricken from the BRFA of 2018.
DLS advised lawmakers to retain the 50-50 cost share, and the General Assembly agreed. Lawmakers have rejected similar cost shift proposals multiple times over the past decade — for good reason.
Reform Left Undone
In 2014, the General Assembly created the Assessment Workgroup (AWG) to recommend improvements to SDAT’s transparency and performance. One significant recommendation was establishing a State-Local Advisory Council to guide SDAT’s work and improve coordination with local governments.
The council was never formed. The recommendations were never implemented. The State expects counties to foot 90% of the bill — with no progress or voice.
Pennies on the Dollar, Long-Term Problems
Let’s be clear: this may offer short-term savings for the State, but it doesn’t fix the underlying challenges. The $21 million shift leaves counties with a less balanced funding model, less certainty, and more risk over time.
Local governments should not fund State agencies they don’t control. And the General Assembly shouldn’t trade sound tax policy for pennies on the dollar.
Stay tuned to Conduit Street for more information.
