MACo Supports Property Tax Credits For Improvements in Revitalization Districts

MACo Associate Director Barbara Zektick recently testified in favor of House Bill 1323, “Property Tax – Credit for Revitalization Districts” which 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.

MACo’s testimony states,

HB 1323 authorizes counties to enact the property tax credit, determine the locations in which to implement it, and apply additional eligibility criteria as necessary. This will allow each jurisdiction that chooses to enact the credit to tailor it to their specific revitalization needs and incentivize improvements in those areas where the jurisdiction sees most fit. Additionally, it gives each county broad discretion to control how many credits it authorizes and how much revenue it is willing to forego to provide the desirable benefits enabled by the bill.

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

MACo Supports Repeal of County Mandate to Repay Comptroller

MACo Associate Director, Barbara Zektick, testified in support of House Bill 1433, “Local Income Tax Overpayments – Local Reserve Account Repayment – Forgiveness,” which 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.

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’s testimony states,

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.

The cross-file to the bill, SB 397, was heard by the Senate Budget and Taxation Committee on February 15, 2017. It passed the Senate unanimously, with an amendment to require the Comptroller to reimburse any local government which has already made a repayment.

Click here for previous Conduit Street coverage.

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

MACo Proposes Local Authority for Agritourism Tax Exemptions

MACo Associate Director, Barbara Zektick, worked with bill sponsor Senator Addie Eckardt to propose a local option for tax exemptions from the agricultural tourism industry for Senate Bill 716, heard by the Senate Budget and Taxation Committee on Thursday, March 2.

MACo’s testimony states,

MACo supports this bill with the sponsor’s amendments. Many counties are interested in promoting agricultural tourism in their jurisdictions as a means to support the agricultural industry. In fact, Baltimore and Harford counties already exempt such activities from their admissions and amusement taxes, through state legislation.

MACo generally supports legislation which enables counties to authorize local tax exemptions by local ordinance, as opposed to bills which mandate those exemptions across the board. Mandated tax exemptions require each county to forego meaningful local revenues to support essential public services, even if the exemption does not serve the best interests of that particular county. Particularly, but not exclusively, during times of economic uncertainty and revenue projection shortfalls, counties require full authority to balance their budgets as they deem most fit.

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

Counties & Municipalities Alike Support Fair Taxation of Online Rental Platforms

MACo Executive Director Michael Sanderson testified in support of legislation (HB 935) that would require facilitators that coordinate the sale or use of accommodations between guests and hosts, like from Airbnb and VRBO, to collect and remit the state sales tax and local hotel rental taxes. The bill relieved the individual host from the responsibility, placing that onus on the intermediary company.

Testimony for this “host friendly bill” states,

According to a recent study by the Penn State University School of Hospitality, nearly 40 percent of the revenue generated on Airbnb is attributed to users who rent multiple units, and nearly 30 percent of the total revenue generated is derived from hosts who operate rentals fulltime.

Online rental platform use represents a significant growing sector of the hospitality industry, and in the interest of fairness, it should be treated as such for taxation purposes. Counties depend on local hotel rental taxes to fund essential public services, collecting just over $110 million throughout the state annually. Applying this existing tax to online rental platform users promotes fairness and helps support education, public safety, and needed community services.

The cross-file to the bill, SB 93, was heard by the Senate Budget and Taxation Committee on February 1, 2017. Joining Mr. Sanderson in support of this bill was Bill Jorch from the Maryland Municipal League (MML).

Useful Link

Conduit Street coverage of SB 93

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

MACo Supports Local Income Tax Credit for Eligible Internships

MACo Associate Director, Natasha Mehu, provided written testimony in support of House Bill 1483, “Income Tax Credit – Eligible Employers – Eligible Internships,” to the House Ways and Means Committee on March 1, 2017.

HB 1483 creates a program that allows businesses to receive a credit against the state income tax for employing eligible interns enrolled in public and private nonprofit higher education institutions in the state. In turn, the interns receive valuable and paid experience in a field that interests them. Counties appreciate that this bill offers a state-funded tax benefit, without a “spillover” residual effect on county revenues and services.

MACo’s testimony states,

Internships supplement classroom experience by providing students exposure to real-world problems, increasing their marketability to employers, offering opportunities for advancement within organizations, and other professional growth opportunities. Employers benefit from the well qualified pool of potential employees the internships create.

Montgomery County Council Member Craig Rice testified on behalf of MACo in support of this bill. The cross-file to the bill, SB 522, was heard by the Senate Budget and Taxation Committee on February 21, 2017.

Useful Links

Conduit Street coverage of SB 522

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

Federal Tax Changes Could Carry State Ripple Effects

jackson-tax-photo-300x201An article in the online source CFO discusses the potential state implications of possible reforms in federal tax systems – particularly relating to corporate income taxation.

From the article:

Nearly every state that imposes a corporate income tax conforms in some way to the federal internal revenue code. In large part, states begin the computation of state corporate taxable income with federal taxable income. Therefore, they allow many federal deductions for state tax purposes.

However, states do not generally conform to various federal tax credits, such as those given for using alternative energy sources. Thus, while changes to the federal tax base may well have an impact on state taxes, changes to federal credits and federal rates are unlikely to have a direct impact on state taxes.

The article also cites a timing issue that affects Maryland, with its legislative session due to conclude well before any realistic timetable for federal action this year:

A major challenge to states will be the timing of federal tax reform. If the federal government actually passes tax reform, when will it become effective? It seems quite likely that if federal reform is passed in 2017, it will be after most state legislatures have adjourned. If so, that means the opportunity for states to respond until 2018 will be limited.

Howard Expands Tax Credits for Retired Military, Elderly Residents

Howard County Executive Allan H. Kittleman has announced an expansion of tax credits for seniors and retired military residents.

As announced by the Howard County Office of Public Information:

The recent expansion of the Senior Tax Credit lowered the eligibility age to 65. Previously, it had been 70. The lower age expands the potential number of county property owners who could qualify for a 25 percent credit from 26,000 to more than 40,000.

In addition to being at least 65 years old, to qualify for the Senior Tax Credit residents must also use the property as their principal residence and not have gross household income over $81,200 for 2017. The combined net worth of the household must also not exceed $500,000, which includes all real property, cash, savings and investments, but does not include the dwelling on which the credit is sought, cash value of life insurance and any tangible personal property. Applications for the Senior Tax Credit are due by September 1, 2017. Applications for the Aging in Place Tax Credit are due by April 1, 2017. Both can be found online at taxcredits.howardcountymd.gov.

Enacted in 2012, the Livable Homes Tax Credit helps seniors and individuals with disabilities make the necessary improvements that will allow them to stay in their homes by providing a tax credit for the cost of installation of accessibility features in existing owner-occupied residences. The recent amendment to the Livable Homes Tax Credit increased the credit amount from 50 to 100 percent of eligibility costs up to $2,500 per year. The amendment also expanded the types of projects that qualify a homeowner for the credit, such as accessible pathways between parking and residences, adding railings to hallways, installing slip-resistant flooring and improving stair design. Age and income are not factors in determining eligibility for this tax credit.

The newly created Aging-in-Place Tax Credit is geared toward helping older residents living on fixed incomes stay in Howard County as they age. To be eligible, a County property owner must be either: at least 65 years old and have lived in the same dwelling for the last 40 years; OR, be at least 65 years old and a retired member of our Armed Forces. This tax credit is equal to 20 percent of the eligible County tax on the lesser of either the assessed value of the property or $500,000 reduced by the Homestead Tax Credit assessment. This credit may be granted for up to five years as long as the property owners remains qualified.

Applications are now being accepted for the Senior Tax Credit and the Aging-in-Place Tax Credit. Applications will be accepted starting this May for the expanded Livable Homes Tax Credit.

Read the full news release or visit the county’s Department of Finance’s website at taxcredits.howardcountymd.gov for more information.

Revenue Collection Tools Ensure Fairness To All Ratepayers

MACo Associate Director, Barbara Zektick, provided testimony in opposition to House Bill 453, “Tax Sales – Water Liens,” to the House Ways and Means Committee on February 23, 2017.  James DiPietro, Deputy Director, Bureau of Utility Operations, Department of Public Works, Anne Arundel County; and Janice Simmons, Bureau Chief, Revenue Collections, Department of Finance, Baltimore City, joined in opposition to this bill.

MACo ensured the bill sponsor and committee that the Association was happy to help work on addressing any issues which might allow some to profit, perhaps unduly, from the hardship of others. However, this bill deprives counties of the opportunity to use an effective tool for enforcement – tax sale – to enforce liens for unpaid water, sewer, or sanitary system charges. The tax sale process, or more specifically the potential for a property to go to tax sale, presents a much needed tool of last resort to ensure that property owners remit payment for their fair share of taxes and charges connected to public services. Most counties in Maryland go to tax sale solely to enforce utility liens. This bill removes this leverage for all counties, and undoubtedly would create many more deficient accounts for water and sewer bills from lack of enforcement – leading to increased rates on citizens who properly pay.

From MACo testimony:

All property owners deserve full and adequate notice of any collection efforts to collect taxes or charges assessed on the property – and as such, every county has procedures to ensure notice is provided prior to tax sale. Additionally, property owners have the right to redeem property within six months from the date of any tax sale by paying the amount owed. The tax sale process includes multiple checks and balances to ensure that local governments can collect overdue fees without unjustly depriving taxpayers of due process, water, or their homes.

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

MACo Strongly Endorses Restoring Highway User Revenues

MACo Associate Director, Barbara Zektick, provided written testimony in support of House Bill 552, “Transportation – Motor Fuel Tax and Highway User Revenue – Increased Local Share,” to the House Environment and Transportation Committee on February 23, 2017.

This bill restores highway user revenues to local governments, ensures that new gas tax revenues resulting from Chapter 429 of 2013 are shared equitably with local governments, and amends the Maryland Constitution to prevent depletion of highway user revenues from local governments in the future. This bill will supply desperately needed revenue to repair and maintain local roads and bridges.

From MACo testimony:

It is unquestionable that local governments maintain the lion’s share of the roads and bridges in our state. Unlike most other states, in Maryland, local governments own and maintain 83% of the roads. Even recognizing that state arterials have more lanes than local roads do, local governments still own and maintain 77% of the lane miles in Maryland. Every resident depends on local roadways. Highway user revenues fund roads and bridges throughout our entire state, through an equitable, time-tested formula based on road mileage and vehicle registrations. This touches the roads our kids ride to school, the roads our first responders travel to keep us safe, and the roads where we all live.

Support MACo’s #Lift4MD initiative!

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

MACo Backs Tax Credit to Incentivize Local Internships

MACo Associate Director, Natasha Mehu, provided written testimony in support of Senate Bill 522, “Income Tax Credit – Eligible Employers – Eligible Internships,” to the Senate Budget and Taxation Committee on February 21, 2017.

SB 522 creates a program that allows businesses to receive a credit against the state income tax for employing eligible interns enrolled in public and private nonprofit higher education institutions in the state. In turn, the interns receive valuable and paid experience in a field that interests them. Counties appreciate that this bill offers a state-funded tax benefit, without a “spillover” residual effect on county revenues and services.

From MACo testimony:

Internships supplement classroom experience by providing students exposure to real-world problems, increasing their marketability to employers, offering opportunities for advancement within organizations, and other professional growth opportunities. Employers benefit from the well qualified pool of potential employees the internships create.

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