By Adam Pagnucco.
The need to fund MCPS was one reason given by county officials for their recent hike in property taxes. Another reason was the effects of the U.S. Supreme Court’s decision in the Comptroller of The Treasury of Maryland vs Wynne case. We examine that issue today.
The Wynne case started when two Howard County residents with income from a firm that did business in other states applied for an income tax credit to offset their out-of-state earnings. While they received a credit against their state income taxes, they were denied a credit against their county income taxes. The residents sued, and the case made it all the way to the U.S. Supreme Court, where the court sided with the plaintiffs on a 5-4 vote. There were two consequences for local jurisdictions. First, they could no longer tax out-of-state income. Second, they owed refunds to residents who had paid taxes on out-of-state income dating back to 2006. Between the two changes, Montgomery County’s Department of Finance estimated lost county income tax revenue of $76.7 million in FY17 and FY18, $31.5 million in FY19, and $16.4 million annually after FY19.
When the Executive sent the council his recommended budget in March, then-current state law required that Montgomery County pay an estimated $115 million in refunds and interest in nine quarterly installments stretching into FY19. The hit in FY17 was $50.4 million. But Montgomery County State Senator Rich Madaleno, Vice Chair of the Senate’s Budget and Taxation Committee, passed a state bill that extended the refund payment period out to FY24. This reduced the county’s immediate liability and the Executive responded by asking the council to reduce his recommended property tax hike from 3.9 cents to 2.1 cents per $100 of assesable base.
Senator Madaleno’s legislation enabled the council to cut the Executive’s original $140 million tax hike by $33.7 million and still increase county funding for MCPS by $110 million. But the County Council did not take advantage of it. They increased property taxes by the Executive’s original amount anyway, a tax hike of 8.7 percent. Why did they do that? We will explore that question soon, but first we will examine another source of potential reductions in the tax hike: savings from collective bargaining agreements.
More in Part Four.
In Center Maryland, see Josh Kurtz’s column about Rich Madaleno’s role as a central opponent of the Hogan administration:
With Hogan riding high in the polls – a circumstance fueled partially by his commitment to cutting taxes, fees and tolls (regardless of the consequences to state government) – Madaleno has become a one-man truth squad. No one in the legislature has so consistently questioned the governor’s policies and the arguments behind them – especially on fiscal matters, where Madaleno, vice chairman of the Budget & Taxation Committee, has a particular expertise. . . .
“It did strike me at the beginning of this term, Hogan ran on a budget and tax platform,” Madaleno says. “I became the vice chair of the Budget & Tax Committee. It just seemed that I was positioned to be able to make the counter-arguments to the governor’s, I think, flawed agenda. So I was happy to step up and push back on what I think are many misrepresentations of what we’ve done over the last eight years.”
Madaleno has been especially vocal about critiquing Hogan’s education spending priorities. When Hogan announced earlier this fall that he was cutting certain fees for state services, Madaleno was quick to try to point out what he saw as the consequences – and take issue with some of the governor’s accounting.
“Indiana may have taken our Colts; they cannot be allowed to trample our principles.”
The Montgomery County Young Republicans have attacked Sen. Madaleno for his letter:
Interesting that the Young Rs view the letter as somehow an attack that needs response. I wonder how in tune they are with their members, as surveys routinely show that younger Republicans heavily favor LGBT rights.
These tweets seem particularly ill-timed since the budget just passed the Senate with bipartisan enthusiasm. If you’re unhappy about taxes and debt, Republicans now own it as much as the Democrats.
A Photo from Three Years Ago that Works Even Better Today
(Photo: Edward Kimmel)
Sen. Rich Madaleno (D-18) mentioned to Kevin Gillogly (reported on his Facebook page) that he is not running for the Eighth Congressional District and will stay in the Maryland Senate, where he is Vice Chair of the Budget and Taxation Committee.
In the Baltimore Sun, Sen. Raskin said previously that he was loathe to oppose Sen. Madaleno who is “like a brother to me” but otherwise, “wild horses” wouldn’t keep him out of Eighth Congressional District race. As Madaleno is not running and the nearest wild horses in Chicoteague don’t seem likely to take up Raskin’s challenge by swimming to the Eighth, it seems safe to say Jamie is running for Congress.
The following is a recording of Sen. Rich Madaleno’s speech on the Senate floor yesterday during the debate on increasing the size of estates exempt from the estate tax to $4 million in 2018 and to the federal level in 2019:
Montgomery Sen. Rich Madaleno (D-18) has special ordered the controversial nomination of Anne Hoskins to the Public Services Commission. In English, this means that the nomination will be discussed separately on the Senate floor.
The purpose appears to be to highlight the problematic approval of trackers by the PSC, which allow utilities to receive rate increases before they make investments rather than the more traditional practice of requesting them afterward.
Concern regarding Hoskins centers on how strongly she will lean toward the utilities– she favors trackers–rather than her past work in industry. After all, industry experience may give her knowledge that strengthens her ability to serve as a good commissioner. And experience in industry is no guarantee of views–the PSC Commissioner who wrote the dissenting opinion opposing trackers came from industry.
I expect that the nomination will pass easily but the special order will usefully highlight the use of trackers and the continuing concern of many Marylanders regarding power reliability and PSC supervision of power utilities.