ANNAPOLIS – Many Maryland municipalities are in a bind. Aid from the state has been cut, they can’t raise taxes without approval from the General Assembly, yet they have to continue to provide services.
The solution to their problem lies in taxes, municipal politicians say, but getting them is a very difficult process, especially with a Republican governor opposed to any tax hikes.
Salisbury Mayor Barrie Tilghman would like to impose a 1 percent restaurant tax to tap the frequent stop-over visitors on their way to Delaware or Virginia, but her hands are tied until she gets the General Assembly’s say-so.
“We (cities) have a lot of need because we are the last stop . . . if we end up cutting services because of lack of funds, there might not be someone else to provide them. We can’t pass it along,” Tilghman said.
To win the right to raise or impose a tax, Tilghman, like other local officials, must approach the county’s delegation with a specific revenue-raising idea. Delegates, in turn, must persuade the General Assembly to approve the plan.
Although this system has been in place for years, municipalities and counties find it especially restricting in a tight budget year.
This year is particularly difficult for Maryland counties and municipalities. State highway revenues, the main source of state aid for municipalities were reduced by 30 percent in the last legislative session, said Scott Hancock, executive director of the Maryland Municipal League.
To make up those cuts in state aid, most counties depend primarily on property taxes – and quite a few, including Howard and Montgomery, have already raised them to the highest levels allowable.
Counties may also tax real estate transactions, but municipalities are even more restricted, relying exclusively on property taxes to pay for police, parks and other services.
“Property taxes are pretty much the whole shebang for us right now,” Tilghman said.
Tilghman thought she had a statewide solution – enabling legislation loosening tax laws for cities and counties – and she brought it to a recent Annapolis hearing.
However, approval is unlikely given the governor’s tight-fisted fiscal policy.
“Obviously the governor has been opposed to raising taxes in the past, especially property and income taxes,” said Shareese DeLeaver, “So it’s questionable, but he’ll take it on a case-by-case basis. So far it’s not a legislative priority.”
In the early 1990s, when the state made similar cuts in local aid, the state gave counties the option of raising local income rates and offered a “disparity grant” in areas where the tax hike would not make a substantial difference.
Most lawmakers find any sort of statewide enabling legislation an unlikely prospect.
“There’s nothing in the offing about that,” snapped Sheila Hixson, chairwoman of the House Ways and Means Committee.
That leaves cities appealing to the General Assembly. Typically, if a new tax only affects a certain area and has local delegates’ support, it’s likely to pass because lawmakers have a “gentleman’s agreement,” said Michael Sanderson, director of the Maryland Association of Counties.
But convincing some lawmakers to endorse a tax increase can be a difficult task.
The Harford County Council recently asked its delegation to promote legislation to raise development taxes and fees for schools.
While Delegate Robert Glassman, D-Harford, delegation leader, backs the plan, the real hurdle will be persuading his colleagues.
Sen. Nancy Jacobs, R-Harford, is disinclined to vote for the legislation, especially since the council is vague on what taxes are targeted for increases.
“I do not think all alternatives have been adequately explored, including the idea of school redistricting,” Jacobs said in a statement.
Even with delegation approval, the “gentleman’s agreement” doesn’t always guarantee General Assembly approval.
During the last session, a 1-cent Prince George’s County restaurant tax never got out of the House Ways and Means Committee, despite the delegation’s support.
“I suspect they felt it would have opened Pandora’s Box and everyone would want it, but I think that would have been a good thing,” said Delegate Barbara Frush, D-Prince George’s, who introduced the legislation. “Right now, our municipalities are losing a lot of state funding.”
Delegate Patrick McDonough, R-Harford, who made a campaign promise not to raise taxes, said he would have voted against the Prince George’s tax, had it gotten out of committee.
“I don’t want it on my record that I voted to raise taxes,” he said. Even though the tax would not affect anyone in his district it would not matter during a re-election campaign, he said. “They’ll still say that McDonough promised not to raise taxes, then went ahead and did it.”