ANNAPOLIS – A bill that would dedicate tens of millions of dollars to school construction by closing what some lawmakers call a tax “loophole” was passed Friday by the House of Delegates.
Construction costs are some of the most pressing issues facing school systems this year as they grapple with deteriorating buildings, swelling student populations and mandates of the Thornton school reform plan.
The proposed state capital budget included $101.5 million for public schools, about 27 percent of the $378.2 million counties had requested.
The legislation would force corporations to pay transfer and recordation taxes, which are part of residential sales, on the transfer of property worth at least $1 million.
An early version of the bill would have raised $200 million over four years, but, because of changes in the real-estate values in the bill, it is not clear how much the approved legislation would now raise.
“There’s a tremendous backlog of school construction out there,” said House Speaker Michael Busch, D-Anne Arundel, who sponsored the bill with Delegate Anne Healey, D-Prince George’s. “There’s no reason for someone out there to circumvent the law.”
The bill has been introduced almost every year since 1990, but it never became law. This is the first time funds would be earmarked for school construction and the greatest share of the dollars would aid seven economically distressed jurisdictions — Allegany, Caroline, Dorchester, Garrett, Somerset and Worcester counties and Baltimore City.
While Busch had hailed the bill as one of the “most significant” in the House this year and it passed 124-17, some delegates were left feeling that business was unfairly targeted.
“It’s a very common practice throughout the country,” Delegate Herb McMillan, R-Anne Arundel, said of exempting corporations from transfer and recordation taxes. “It’s not a loophole.”
Businesses may bypass Maryland for Virginia and West Virginia, states that exempt corporations, McMillan warned.
House Minority Whip Anthony O’Donnell, R-Calvert, said he voted against the bill in part because funds were disproportionately allocated to some counties.
“I didn’t think it was in the best interest of the counties I represent,” he said.
But Busch said school construction is more important than corporate accommodation.
“I don’t think there could be a more appropriate way to do it.”