A state commission charged with making recommendations on the state’s property tax rate voted unanimously Wednesday to keep things steady.
The recommendation was likely, given that the General Assembly passed a budget not requiring an infusion from new tax revenues, but lawmakers’ spending was still questioned at the meeting of the Commission on State Debt, which makes the annual recommendation on state property tax rates to the Maryland Board of Public Works.
“I want to once again renew my call to legislators to resist the temptation to increase tax rates in the future, especially when many economists are in consensus that our economy may be approaching a downturn,” Comptroller Peter V.R. Franchot (D) said.
While the state’s property tax rate has stayed at 11.2 cents per $100 of assessed valuation since 2007, during the just-concluded legislature an increase was put forward by fiscal analysts as a possible solution to balance the budget. Roundly rejected by Democratic lawmakers who pursued other options, the recommendation nevertheless stirred debate in the State House, as Republicans, including Gov. Lawrence J. Hogan Jr. (R) railed against the idea of an increase.
“I think the legislature adjourned with an excellent budget which did not call for increases in taxes,” Treasurer Nancy Kopp said.
But lawmakers have conceded that new revenues must be found if they are to meet the Kirwan Commission recommendations to reform the state’s public education system at an additional cost of up to $3.8 billion annually. A small group of legislators and commission members is set to meet over the summer to establish funding formulas that would determine the state and county allocations for school system budgets. Another group is studying the creation of a legalized – and taxed – recreational marijuana industry in the state.
Kevin Kinnally, associate director of the Maryland Association of Counties, said he doesn’t anticipate many counties raising their property tax rates this year to help balance 2020 budgets, largely because the increases in county education funding haven’t been determined yet.
“Next year we know there will be a lot more to deal with,” he said. While property taxes are the largest source of revenue for counties, there are other options.
In Baltimore County this week, County Executive John A. “Johnny O” Olszewski Jr. (D) proposed a budget that includes a record investment in public education – and the county’s first income tax increase in 26 years.
“It’s clear that there is no path forward to maintain our quality of life and meet our growing challenges without bringing in new revenues,” Olszewski said in a budget message.
While Kinnally couldn’t predict what counties might do with property tax rates in the 2021 budgets and beyond, he noted that income tax rate increases are less regressive, so that might be a desirable option for county governments.
The Commission on State Debt’s recommendation to keep the property tax rate steady will go to the Board of Public Works next week. A state property tax rate of 11.2 cents for the 2020 fiscal year is expected to generate $863.6 million dollars.
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