Caroline Entertains Income Tax Rate Increase

The Commissioners of Caroline County will entertain a possible income tax increase at their meeting on Tuesday, October 31 at 10 a.m.

The proposed increase from 2.73 percent to 3.2 percent would provide funding for two major projects: replacement of Greensboro Elementary School and construction of new building to house the Caroline County Sheriff’s Office.

According to the Caroline County Board of Education, Greensboro Elementary is overcrowded and overdue for renovation or replacement.  Based on preliminary engineering, building a new school on the existing site would be less expensive than renovating the existing structure.  The total cost of the Greensboro Elementary project is roughly $46 million.  The County expects its share to be around $18 million, with the remainder paid by the State.

The Caroline County Sheriff’s Office currently occupies space in the basement of the County Detention Center.  The cost of the Sheriff’s Office building is expected to be around $3.5 million.  This structure would be built on land owned by the County on Double Hills Road.  This project must be fully funded with local dollars.

The income tax rate must be set by November 1 for the following year.  Those interested in providing comment on the proposal are invited to attend the meeting.

House Votes Today on Federal Budget Plan that Eliminates Local Tax Deduction

The National Association of Counties issues a call to action to ask Representatives to remove state and local tax deduction provision from budget plan.

From CNN,

The House of Representatives votes Thursday on a budget resolution that would allow Congress to fast-track a tax reform bill, a major legislative effort that Republicans are desperate to launch.

But frustration over a proposal to eliminate a popular tax deduction has some Republicans threatening to rally together and vote with Democrats in opposition to the budget.

The current tax reform framework calls for nixing the State and Local Tax deduction (SALT), a tax break used by nearly one-third of filers. Cutting the deduction would help Republicans raise more than a trillion dollars to help pay for tax cuts over 10 years, making it a huge source of revenue for their overall plan to reform the tax code.

But Republicans from states like New York, New Jersey, Illinois and California argue that their constituents rely on the deduction. While some are open to making changes to SALT — such as capping the income level at which taxpayers could use it — others don’t favor any kind of compromise and want tax writers to leave SALT completely alone.
“My solution is to take it off the table,” said Republican Rep. Leonard Lance of New Jersey.

According to the National Association of Counties, eliminating the state and local tax (SALT) deduction  makes local governments and home owners a major “pay for” in the forthcoming tax reform plan.

NACo has issued a call to action for county elected officials to preserve the State and Local Tax Deduction.

Maryland is among the most heavily affected states – with the highest share of taxpayers claiming the deduction. Analyses show that more than $1.3 million Maryland tax returns include the SALT deduction. Many middle-income Marylanders would feel a substantial tax increase under a plan that includes eliminating the SALT deduction.

From Jack Peterson, NACo Associate Legislative Director:

The vote on the House Resolution is expected to be very close because of the bad language on SALT—and a group of Republican lawmakers fighting to preserve SALT. In the next 24 hours, we ask that you to call your member of Congress and urge them to vote NO on the House Budget Resolution in order to FULLY PROTECT SALT.

You may use the following talking points when calling your member of Congress. To reach your lawmaker, dial (202) 224-3131 and ask to be connected to your member’s office.

KEY MESSAGES

I’m calling today to urge you to vote NO on the upcoming House Budget Resolution because the resolution explicitly targets the state and local tax deduction (SALT) as the major “pay for” in the upcoming tax reform fight.

  • By eliminating SALT, Congress would double tax residents on their income, shifting $1.3 trillion away from local communities and to the federal government. Furthermore, the Budget resolution sets a Double Standard because corporations would be able to continue fully deducting their state and local taxes, but individuals and families in our district could not.
  • Eliminating SALT hits home owners particularly hard – their taxes will go up while home values will go down. That is wrong and we need you to stand up for homeowners and other taxpayers in your Congressional District by voting NO on the budget resolution until there are assurances that SALT will be fully preserved.
  • Any change to SALT would harm vital services and infrastructure investments provided by state and local governments. Compromise proposals will not cover every resident in our district and state, and it will create a slippery slope that allows Congress to chip away at SALT in the future.

NACo is not asking lawmakers to vote ‘no’ on tax reform. NACo’s advocacy asks that Congress protects state and local control, local revenues, and local taxpayers as they move forward with budget discussions, and take the SALT deduction off the table.

You can view your county SALT profile from NACo here, and check out a zip-code calculator to determine impact on home owners in your zip code here.

For more information, feel free to reach out directly to Jack Peterson on NACo staff with any questions or responses you receive: jpeterson@naco.org.

Tax Sale: A Delicate Balance Maryland Gets Right

Today at the second meeting of the Task Force to Study Tax Sales in Maryland, county tax sale and public works experts joined representatives from the Maryland Municipal League (MML) and Washington Suburban Sanitary Commission (WSSC) to testify on the importance of the tax sale process, primarily for collecting local government tax and fee revenues, and secondarily, as a tool to combat blight.

The following individuals provided testimony about how – and why – the process works for the collection of overdue taxes and water and sewer bills:

  • Candace Donoho, Director, Government Relations, MML
  • Cheryl Lewis, Oxford Town Administrator
  • Jim DiPietro, Deputy Director, Bureau of Utility Operations, Anne Arundel Department of Public Works
  • Karyn Riley, Director, Intergovernmental Relations, WSSC
  • Michael Coveyou, Chief, Division of Treasury, Montgomery County Department of Finance
  • Julie Day, Chief of Staff, Baltimore Housing
  • Linda Watts, Assistant Director of Finance, Howard County
  • Helen Shomberg, Assistant Controller, Anne Arundel County
  • Darcy Good, Tax Billing Manager, Anne Arundel County

Additionally, Julie Day provided detailed testimony about how Baltimore City uses tax sale procedures to combat blight and facilitate community development. Karen Riley provided details about the issues inherent in attempting to collect overdue water bills without lien authority.

From MACo’s testimony:

Maryland’s tax sale process effectively enables fair collection of local government revenues, including those due to municipalities, at an efficient cost to taxpayers. In most cases, the mere notice of a property’s eligibility for tax sale is followed by prompt payment of overdue charges. For properties that do enter tax sale, a substantial window of time exists before foreclosure may commence. Most importantly, counties rely on tax sale to keep revenue systems fair. Allowing bills for county services to go unpaid depletes resources for vital public services, and extends fiscal pressure to those taxpayers who pay sufficiently and on time.

The process proves just as necessary for collecting payment on utility liens. If delinquent water and wastewater accountholders are not held responsible for covering their fair share of supporting vital infrastructure, counties must raise rates on paying users, defer imperative maintenance, or both. …

Counties welcome the opportunity to work with this task force to further refine the process, balancing the interests of property owners, investors, and local governments. Counties respectfully request that this task force consider their need to collect revenues to fund essential public services fairly and efficiently when evaluating the many interests and needs involved in the process.

Tax sale investors provided similar testimony. Pro bono attorneys representing low income homeowners in tax sales provided advice on how to better protect their clients. Suggestions include providing explanations of the tax sale language in plain language, and authorizing waivers of estate fees and costs for small and regular estates for low-income families, to provide greater access for heirs to transfer property to their name.

The Task Force plans to convene at least two more times before the 2018 session commences.

 

State Budget Outlook: The Sky’s Staying Put

Maryland’s budget shortfall is much lower than expected, learned members of the General Assembly’s Spending Affordability and budget committees yesterday from Warren Deschenaux, executive director of the Department of Legislative Services. Deschenaux, in his final presentation to a group of this size before his pending retirement, said the anticipated fiscal 2019 budget gap of $740 million is now $250 million. This results from favorable bond premiums, lower state employee health care costs due to vacancies and a reduction in Medicaid obligations.

He advised the General Assembly members to take a hard look at Maryland’s sales tax system. Sales tax revenues have fallen for some time due to boosted popularity of e-commerce, and a general transition from spending on goods to services.

From The Washington Post:

“The outlook is better than I expected it to be,” Deschenaux said.

To cover the smaller shortfall, he suggested that the General Assembly consider “freezing everything at current levels” except for mandated spending such as K-12 education and reimbursements for care providers who work with the disabled.

While the news was rosier than in previous years, analysts noted that the forecast did not include the devastating impact that federal changes to health care or the tax code could have on state revenue.

Helpful Links

Briefing document

Coverage by The Washington Post

The Costs of Luring Amazon

building-2762319_1920It seems like everyone is talking about luring Amazon’s second headquarters to their jurisdiction, and the State is no exception. With Amazon’s deadline for proposals coming this week, Douglass Mayer, spokesman for Gov. Larry Hogan, has said that Maryland will propose “the biggest incentive offer in the State’s history by a mile,” reports The Baltimore Business Journal

From that coverage:

Already, the state has invested more than $50 million in tax incentives for two Amazon distribution centers in Baltimore and Cecil County. Another package totaling at least $16.2 million is awaiting a deal under negotiation in Baltimore County at the former Sparrows Point steel mill site.

In total, Amazon has netted $1.24 billion in taxpayer backed incentives across the U.S., a special report by the Business Journals highlighted this week.

Mayer said Hogan had sanctioned the pie-in-the-sky tax break package as part of the ongoing push for HQ2 and monitors the developing bids daily. The historic incentive package no doubt will blast past the $317 million offered to the Federal Bureau of Investigation to move its headquarters to Prince George’s County last year.

Amazon’s deadline for proposals fors its estimated $5.5 billion investment and 50,000 jobs is this Thursday, October 19. Prince George’s, Howard and Baltimore City have all indicated their intentions to place bids.

More on the competition for Amazon:

UMD System Waives Tuition Rule For Amazon Employees

Baltimore submits city as a contender for Amazon’s 2nd HQ search

Governor To Seek Hometown Heroes Tax Break Expansion

Last Friday at the Western Correctional Institution in Allegany County, Governor Larry Hogan announced that he plans to seek legislation this upcoming session to expand the Hometown Heroes state and local income tax breaks to retired correctional officers. He also said he wants to expand the tax break to cover all pension income, not just the first $15,000 – a move that could cost counties significant amounts in local income tax revenues.

Last session the General Assembly passed Senate Bill 597/House Bill 100, referred to colloquially as the “Hometown Heroes Act” and substantially similar to the Governor’s Senate Bill 322/House Bill 388 of that name. The Act 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. MACo opposed this legislation on the grounds that it would cause local revenues to decrease by $2.5 million in FY 2018 and by $2.8 million in FY 2022. After many years of consideration by the legislature, the bill passed this year and the Governor signed it – making the tax deduction available for the 2017 tax year.  Bill Information | MACo Coverage

From the Governor’s press release:

The 2017 legislation exempted retired law enforcement and fire, rescue, and emergency response personnel from state income taxes on a portion of their retirement income. The Hometown Heroes Act of 2018 will expand the previous law to include correctional officers who perform some of the most difficult jobs in the public safety sector. In addition, the bill will exempt all retirement income received from these occupations from state income taxes.

The Washington Post covers the story.

Gain Easier Access to Local Finance, State Aid Reports on New Website

The Department of Legislative Services has re-designed its webpages, providing a more direct route to legislative, budgetary, and other statewide reports.

Screenshot 2017-10-12 12.03.58.png

The Department of Legislative Services develops a number of annual reports on local finances, demographics, and state aid to local governmental entities. The reports may be found through the General Assembly’s webpage, but the Department’s new website now provides a simpler route to them.

Check out the Department of Legislative Service’s Publications page.

Reports provided include 2017 fiscal year information on:

2018 fiscal year information will be released toward the start of the General Assembly Session in December 2017 and January 2018.

 

 

Betting Sports Betting Makes Legislature’s Agenda

Representatives of Maryland’s casino industry delivered a message to the Joint Committee on Gaming Oversight yesterday: authorize sports betting, and move on this now.

The federal Professional Amateur Sports Protection Act (PASPA), passed in 1992, prohibits sports betting in most states, including Maryland. However, a number of states have considered legislation recently to allow or at least evaluate sports betting, including include Connecticut, Michigan, New York, Pennsylvania, South Carolina and West Virginia. Last session in Maryland, Delegate Jason Buckel sponsored House Bill 989, Gaming – Wagering on Sporting Events – Study and Implementation, which would have created the Task Force to Study the Implementation of Sports Gaming, and under certain terms, allowed the State Lottery and Gaming Control Commission (SLGCC) to issue sports gaming licenses.

The State of New Jersey actually passed laws in 2012 and 2014 meant to allow sports betting at state casinos and racetracks, and over the summer, New Jersey Governor Chris Christie signed into law a bill that imposes a 10.5 percent tax on winnings for companies that operate daily fantasy sports leagues. New Jersey’s activities triggered litigation that has arrived before the Supreme Court. Last June, the U.S. Supreme Court announced that it will hear the New Jersey case challenging the constitutionality of preempting most states from authorizing sports betting. It is expected to hear the case next spring.

But waiting until the Supreme Court makes a decision may be too late, argues the Maryland gaming industry.  The Baltimore Sun reports:

[Joe] Weinberg, chief executive of Cordish Global Gaming, urged members of the Joint Committee on Gaming Oversight to take up the issue in 2018 so that a constitutional amendment may be put on next year’s general election ballot. …

Weinberg warned that Maryland’s competitors for casino tax dollars already are lining up to change their laws in case the Supreme Court rules on a pending case to allow more states to offer sports betting.

“If we wait for 100 percent clarity on federal law, we will be two to three years behind the surrounding states,” he said.

The bottom line: if authorized, sports betting could materially affect the State’s – and possibly counties’ – bottom lines. All would welcome the additional tax revenue, we bet.

Conduit Street Podcast, Episode #2 – How Would Federal Tax Reform Affect Maryland?

Federal tax reform is a hot topic in Washington, and two potential changes could wreak havoc on county finances. Congress is considering eliminating both the deductibility of state and local taxes (SALT) and the tax exemption for municipal bonds to pay for other priorities.

On the latest episode of the Conduit Street Podcast, Kevin Kinnally and Michael Sanderson discuss how the latest tax reform proposal would affect Maryland.

MACo has made the podcast is available through iTunes by searching Conduit Street Podcast. You can also listen on our Conduit Street blog with a recap and link to the podcast.

Listen here:

Suit Challenges County “Tax Cap” Override, State’s Authority

Taxpayers in Prince George’s County are suing, arguing that a 2015 tax rate increase adopted under state-passed provisions violates a citizen-enacted charter limitation. The lawsuit has advanced through preliminary motions, and will be heard in Circuit Court in December. The litigants seek to place the 2015 measure onto the ballot in 2018, for approval by county voters.

From coverage on the WTOP website:

The county is confident the courts will find it acted lawfully, a county spokesman said.

“The property tax increase that was implemented and voted on by the Prince George’s County Council was done in accordance to state law, which allows for property tax increases in jurisdictions that have tax caps, as long as it is restricted to funding education,” said Scott Peterson, spokesman for Prince George’s County Executive Rushern Baker.

The central argument in the case, apparently, will be the state’s authority to legislate a provision that overrides elements of a county charter. Four counties currently have rigid tax limitations in their charters, but 2012 legislation authorized counties to exceed those limits if they did so to support public education. The Attorney General opined soon after that bill’s passage that the provision was legal.