House Passes Bills Altering Property Assessments Processes

The House has passed the following bills which impact the property assessments process. These bills will cross over to the Senate Budget and Taxation Committee for hearings.

HB 1402 – Property Tax Appeals – Payment of Refunds – Deadline requires counties to pay refunds resulting from property tax assessment appeals within an established time frame. MACo supported with amendments to make the requirement more feasible. MACo’s amendments sought to extend the amount of time from 21 days to 30 days, and begin counting the days after the county receives notice of the decision from the appeal authority. The bill sponsor, Delegate Herb McMillan, introduced the amendments on MACo’s behalf, and the House adopted them.

MACo did not take a position on the following bills:

HB 592 – Real Property Tax – Assessment Appeals Process requires the supervisor of assessments and the Property Tax Assessment Appeals Boards (PTAAB) to hold hearings on specified appeals no later than 90 days after receiving the appeal. The bill passed the House with amendments.

HB 1394 – Property Tax – Reassessment After Appeal prohibits the State Department of Assessments and Taxation (SDAT), when conducting a real property reassessment after an appeal, from automatically resetting the assessment of the property to its value before the appeal. SDAT may only increase the assessment of the property above the level determined during the appeal if circumstances arising after the appeal justify an increase in the assessment.

Follow MACo’s advocacy on these and other tax bills by clicking here.

 

 

 

Both Chambers Passing Myriad Of Optional Property Tax Credits

The General Assembly is moving on a number of bills which give counties more flexibility to provide property tax breaks. None of the bills listed below set any mandates on counties, but rather, provide broader leeway to provide tax breaks as appropriate for their jurisdictions.

Bills MACo Supported

The House has passed HB 1323 – Property Tax – Credit for Revitalization Districts, a bill MACo supported with would authorize local governments to grant optional property tax credits to homeowners who make improvements to their homes in specified “revitalization districts.” Local governments have authority to define what a “revitalization district” is and where to designate them.

The House has also passed House Bill 351, Property Tax – Homestead Property Tax Credit Percentage and Constant Yield Tax Rate – Deadlines. This bill extends the deadline for local governments to set or change their homestead property tax credit percentage, moving it from November to March. MACo supported the bill.

Other Bills Passed Out of The House

MACo did not take a position on the following bills, which have passed the House and will be heard by the Senate Budget & Taxation Committee:

HB 231 Property Tax Credit – Disabled or Fallen Law Enforcement Officers and Rescue
Workers – Alteration authorizes counties to extend an existing property tax credit for dwellings owned by the surviving spouse of a fallen law enforcement officer or rescue worker to include the fallen officer’s cohabitant.

HB 979 – Property Tax Credit – Public Safety Officers authorizes county governments to grant, by local law, a property tax credit for a dwelling owned by a firefighter, an emergency medical technician, a correctional officer, a police officer, or a deputy sheriff employed full time by a public safety agency in the county where the individual resides. County governments may establish, by law, the amount of the property tax credit, the duration of the property tax credit, and additional eligibility requirements for public safety officers to qualify for the property tax credit.

HB 1234 – Property Tax – Credit for Retired Military Service Members – Eligibility alters the eligibility criteria of a local option property tax credit for specified members of the U.S. Armed Forces by specifying that eligible individuals must be members of the uniformed services of the United States as defined by 10 U.S.C. Section 101, the military reserves, or the National Guard.

Bills Passed By The Senate

The Senate has passed a few property tax credit bills as well. These bills will cross over to the House Ways & Means Committees for hearings. MACo did not take positions on these bills.

SB 108 – Property Tax Credit – Erosion Control Measures – Nonstructural and Structural Shoreline Stabilization alters the requirements for a local option property tax credit for specified erosion control structures.

SB 261 – Property Tax Credit – Residential Property Damaged by Natural Disaster alters a local option property tax credit for property that has suffered flood or sewage damage by including damage caused by a natural disaster.

SB 282 – Property Tax Credit – Disabled or Fallen Law Enforcement Officers and Rescue Workers – Alterations increases the number of years, from 2 to 10, within which a disabled law enforcement officer or rescue worker or the surviving spouse of a fallen law enforcement officer or rescue worker must have acquired specified residential property in order to qualify for a specified local option property tax credit.

SB 601 – Property Tax Credit – Elderly Individuals and Veterans – Eligibility broadly alters the eligibility criteria for a local option property tax credit for elderly individuals by removing the requirement that the individual must have lived in the same dwelling for at least the preceding 40 years. In lieu of this existing requirement, the bill provides that the individual must have lived in the county for the preceding 25 years and the dwelling for which the tax credit is claimed must be located in that county.

Follow MACo’s advocacy on these and other tax bills by clicking here. 

Income Tax “Mixed Bag” – Some Bills Moving, Some Not

A number of bills are moving this session which will affect local income tax revenues to varying degrees. All of these bills are subtraction modification bills – meaning that they create additional deductions in the taxable income base. County’s local income tax is based on total income, after deductions are made at both the Federal and state levels. If all of these bills pass, local income tax revenues decrease by about $6 million in fiscal 2018.

Overall, MACo has urged the general Assembly not to enact tax changes that have substantial carryover effect on county revenues. State tax credits, for example, can effect much the same outcome as a subtraction modification, without implicitly mandating a loss in county revenues. Alternatively, a range of local option tax benefits against the property tax or other local revenues can reach a similar policy goal without the state decision trumping local input.

HB 100/SB 597 – Income Tax Subtraction Modification – Retirement Income of Law Enforcement, Fire, Rescue, and Emergency Services Personnel provides for a subtraction modification for the first $15,000 of retirement income for individuals at least 55 years of age who are retired law enforcement officers or fire, rescue, or emergency services personnel of the United States, the State of Maryland, or local government. MAC opposed this bill because it would cause local revenues to decrease by $2.5 million in FY 2018 and by $2.8 million in FY 2022. HB 100 passed out of the House unanimously and will be heard in the Senate Budget and Taxation Committee on March 21 at 1pm. The crossfile, SB 597, has passed second reading in the Senate.

MACo did not take positions on the following subtraction modification bills which have gained traction, generally for policy reasons or because the fiscal impacts on local income tax revenues are relatively negligible.

HB 3 – Income Tax – Subtraction Modification – Olympic, Paralympic, Special Olympic, and Deaflympic Games Medals and Prizes   exempts from the State and local income tax the value of specified medals and prize money or honoraria received by an individual who competes in the Olympic, Paralympic, Special Olympic, or the Deaflympic Games. The bill passed out of the House and will be heard in the Senate Budget & Taxation Committee on March 22 at 1pm.

HB 83 –   Income Tax – Subtraction Modification – Discharged Student Loan Debt expands the existing subtraction modification for income resulting from the discharge of student loan debt by eliminating the requirement that only student loans that are discharged due to total and permanent disability or death qualify for the exclusion. This subtraction modification only really applies to student loan debt which is canceled in a small number of situations, such as bankruptcy or compliance with certain student loan forgiveness programs.  This has passed second reading in the House.

HB 822 – Income Tax – Subtraction Modification – Police Auxiliaries and Reserve Volunteers increases to $5,000 the value of the income tax subtraction modification for
qualifying police auxiliaries or reserve volunteers. The bill passed out of the House unanimously and will cross over to the Senate Budget & Taxation Committee.

SB 295 – Income Tax – Subtraction Modification – Military Retirement Income – Individuals at Least 65 Years Old expands the existing military retirement income tax subtraction modification by increasing from $10,000 to $15,000 the maximum amount of retirement income that can be excluded from Maryland adjusted gross income for purposes of calculating Maryland income tax liability. In order to qualify for the increased subtraction modification, the individual must be at least 65 years old. The Senate has passed the bill on second reader.

SB 367 – Income Tax – Subtraction Modification – Mortgage Forgiveness Debt Relief continues an existing subtraction modification for forgiven mortgage debt resulting from certain foreclosure proceedings. The maximum amount of the subtraction may not exceed $100,000 ($200,000 if married filing jointly). The bill passed the Senate unanimously and will be heard in the House Ways & Means Committee on March 22 at 1pm.

The following subtraction modification bills have not seen any movement at this time:

HB 0033 – Income Tax – Subtraction Modification – Retirement Account Withdrawals for Higher Education Tuition

SB 238/HB 0195 – Income Tax Subtraction Modification – Retirement Income (Fairness in Taxation for Retirees Act)

HB 0196 – Income Tax – Subtraction Modification – Interest Paid on Student Loans

HB 0230 – Income Tax – Subtraction Modification – First-Time Homebuyer Savings Accounts

SB 3/HB 544 – Income Tax – Subtraction Modification – Military Retirement Income

HB 550 – Income Tax – Subtraction Modification – Military Retirement Income

HB 1033 – Income Tax – Subtraction Modification – Discharged Student Loan Debt

SB 254/HB 1174 – Income Tax – Subtraction Modification – Perpetual Conservation Easements

HB 1235 -Income Tax – Subtraction Modification – Qualified Maryland Toll Expenses

HB 1244 – Income Tax – Subtraction Modification – Military Retirement Income – Individuals Under the Age of 65 Years

SB 0249 -Income Tax – Subtraction Modification – Donation of Rented Equipment

Governor’s Bills:

SB 320/HB 399 – Student Debt Relief Act of 2017

SB 321/HB 375 – Income Tax – Subtraction Modification – Military Retirement Income

Other Helpful Links

All 2017 bills impacting local tax revenues and status

MACo Opposes Prevailing Wages on Public Construction TIF Bond Projects

MACo Associate Director Barbara Zektick testified in opposition of legislation (SB 870) which would require payment of prevailing wages on construction contracts receiving any funds from tax increment financing (TIF) bond proceeds. Counties are concerned that this bill will drive up costs of public infrastructure projects, stifle use of a demonstrably successful economic development tool, and squeeze out small businesses from participating in infrastructure construction projects.

MACo’s testimony states that the bill,

unfairly applies prevailing wage requirements to certain projects receiving TIF bond proceeds when those projects would not otherwise have to comply even if financed with other public funds.

…this bill will significantly raise costs for development projects funded with TIF bonds. If costs are raised over and above what the development will return in future tax revenues, the county will not issue the TIF because it is not economically viable. This generally prevents the development from occurring, sacrificing blight elimination, job creation, targeted economic development, and growth to the taxable base.

Under existing law, prevailing wages are required on public works contracts valued at $500,000 or more. However, the only threshold in SB 870 is the amount of the TIF bond, applying the wage requirements to any contract funded with a TIF bond valued at $500,000 or higher. It is extremely unlikely that a local government would issue a TIF bond of less than this amount. Therefore, the bill would require payment of prevailing wages for virtually any construction project receiving TIF funds, regardless of the size of the contract or scope of the project. This extremely broad scope unfairly applies higher-than-market wage requirements to projects in TIF districts where these terms would not apply to public works contracts in any other situations.

At the hearing, Senator Stephen Hershey asked why the state would establish a mandate for how TIF money must be spent, if counties created the TIF districts, constructed the deals, issued the bonds and financed the projects with county property tax revenues. MACo further emphasized that counties already have the ability to require prevailing wages in TIF projects on a case by case basis  – and it should remain this way.

This bill was heard by the Senate Finance committee on March 16.

Follow MACo’s advocacy efforts during the 2017 legislative session here.

House Amends Tax Exemption Bill To Provide Local Control

The House has amended a local tax exemption bill to provide local governments with greater control. The House Ways and Means Committee heard House Bill 842 – Admissions and Amusement Tax – Exemption for School Field Trips on March 2. This bill, as drafted, would have established an exemption from the local admissions and amusement tax for admissions related to State public school field trips.

At the hearing, the Committee discussed giving local governments discretion over whether to enact this exemption for their respective jurisdictions. Yesterday, the Ways and Means Revenue Subcommittee voted to amend the bill to enable local governments to enact the exemption, rather than require the exemption in all counties and municipalities.

The House of Delegates approved the bill for second reading, with the amendments, today.

House Passes Bill Changing Homestead Credit Percentage Deadline

The House has passed House Bill 351, Property Tax – Homestead Property Tax Credit Percentage and Constant Yield Tax Rate – Deadlines, on second reader. This bill extends the deadline for local governments to set or change their homestead property tax credit percentage, moving it from November to March. 

The House adopted technical amendments presented by the State Department of Assessments and Taxation (SDAT). These amendments authorize SDAT to amend constant yield rates if the homestead tax credit percentage changes, and require a disclaimer in assessment notices that the taxable assessment may change if the homestead tax credit percentage changes.

MACo supported this bill. From MACo’s testimony

MACo supports this bill because it gives counties more time and flexibility to set their homestead property tax credit percentages. By moving the deadline to four months later, counties will have the opportunity to consider their most recent revenue estimates and budget plans for the coming fiscal year and the flexibility to adjust their homestead tax credit percentages as appropriate.
 

By March, counties are much further along in the process of planning their operating budgets for the upcoming fiscal year, and some may have already submitted their proposed operating budgets for consideration and approval. Moving this deadline to March gives counties greater opportunity to coordinate their homestead property tax credit percentage with their budget plans and needs for the upcoming fiscal year.

Both Chambers Pass Income Tax Overpayment Forgiveness 

It looks like counties and municipalities owing income tax reimbursements due to the Comptroller’s recent misallocations may get a break. House Bill 1433, “Local Income Tax Overpayments – Local Reserve Account Repayment – Forgiveness” passed second reader in the House today, with amendments. This bill repeals the requirement that local governments must reimburse the Local Income Tax Reserve Account for overpayments of local income tax revenue distributions made by the Comptroller. This bill allows for funds to be drawn from the Account, rather than local government budgets, to rectify errors for which they are not responsible.

The amendments require the Comptroller to repay any reimbursements already paid by counties and municipalities. The Senate has already passed the crossfile, Senate Bill 397, with this amendment.

Over this past year, due to an issue concerning misclassified addresses, the Comptroller’s Office has identified $21 million in local income tax revenues which were distributed to counties and municipalities incorrectly for tax years 2010-2014 – resulting in overpayments to some local governments and underpayments to others.
MACo supported this bill. From MACo’s testimony:

MACo supports this bill because it alleviates local governments from bearing the burden for unpredicted liabilities due to no fault of their own. Such liabilities could potentially compromise a local government’s ability to provide funds for needed programs and services.

Senate Passes Open Space Funding Bill With Significant Amendments

Today Senate Bill 273, State Forest, State Park, and Wildlife Management Area Revenue Equity Program passed second reading in the Senate with significant amendments, with little discussion on the floor. 

This bill addresses a longstanding funding shortfall to counties for their acreage of State forests, parks, and wildlife management areas.
It establishes an Open Space Incentive Program which, as introduced, would have provided counties an annual payment of $250,000 for every 10,000 acres attributed to State forests, State parks, and wildlife management areas. As amended, however, it requires the state to pay those counties with at least 40,000 acres of qualifying open space (Allegany, Dorchester, Garrett, Somerset, and Worcester) the equivalent of property taxes for the land.

MACo supported the bill. From MACo’s written testimony:

MACo believes SB 273 will serve as an appropriate incentive to counties to preserve their State forests, parks, and wildlife management areas. As State lands or designated wildlife areas, these properties are exempt from the local property tax, which is the counties’ top revenue source. These revenues fund a large portion of county expenditures from which these lands benefit, including law enforcement, emergency management services, stormwater infrastructure, and roadways. Providing services to these areas without revenues for this specific purpose draws funds away from other parts of the county budget.

Last year, both the Senate and House passed versions of Senate Bill 263, which closely resembled Senate Bill 273 as it was introduced. That bill passed out of both chambers but did not survive conference committee. MACo also supported that bill.

MACo: Make Tax Refund Requirement Feasible For Counties

MACo Associate Director Barbara Zektick recently supported legislation (HB 1402) which requires counties to pay refunds resulting from property tax assessment appeals within an established time frame, but sought amendments to make the requirement more feasible. MACo’s amendments sought to extend the amount of time from 21 days to 30 days, and begin counting the days after the county receives notice of the decision from the appeal authority. The bill sponsor, Delegate Herb McMillan, introduced the amendments on MACo’s behalf.

MACo’s testimony states,

Begin Tolling Upon Tax Collector’s Receipt of Notice From Appeal Authority
A number of different government sectors participate in the appeal and refund process: the appeal authority, which may be the State Department of Assessments and Taxation (SDAT), a Property Tax Assessment Appeal Board, or the judiciary; the local government property tax collector; and the State, in its role as the state property tax collector. Prior to issuing a refund, the local government must first receive notification of the decision from the appeal authority, then coordinate with the taxpayer and State to verify the amount of state and local property tax due. Local finance offices cannot begin this verification process until they receive the initial notification of the refund owed from the appeal authority. For this reason, MACo respectfully requests that the timeframe begin to toll upon receipt of the decision notice.

Provide 30 Days to Issue Refunds

This would provide counties with a reasonable buffer of an additional week to accommodate for minor delays that can occasionally result from unavoidable occurrences like inclement weather closings, vacations, holidays, understaffing, technology malfunctions, etc. Counties believe that 30 days is a reasonable timeframe to verify the amounts owed with the applicable parties and subsequently issue these payments.

Follow MACo’s advocacy efforts during the 2017 legislative session here.

MACo Supports Streamlined Process For Fixing Neglected Property

MACo Associate Director Barbara Zektick recently testified in favor of House Bill 1496, “Tax Sales – Property Maintenance and Nuisance Condition Violation Judgments” which would allow local governments to use tax sale procedures to collect on judgments for property maintenance and nuisance condition violations.

MACo’s testimony states,

MACo supports this bill as a means to provide local governments with the tools necessary to abate nuisance conditions and property maintenance violations, without having to pass those costs onto other taxpayers.

Local governments often must step in to address the adverse conditions when landowners cause nuisances or allow their property to fall into a state of disrepair. Those landowners’ neighbors already have to deal with the negative impacts of the offending activity or neglect; they should not also have to bear the costs for abatement through their own tax dollars. Local governments should not have to choose between spending public funds to abate nuisances on private property, or leaving these adverse conditions to continue unaddressed, negatively affecting their citizens’ property values and quality of life. This bill provides a tool to allow local governments to hold property owners accountable, without having to pass the costs along to law-abiding taxpayers or make cuts to essential public services.

Follow MACo’s advocacy efforts during the 2017 legislative session here.