Part B
TAXES
SEMIANNUAL PAYMENT SCHEDULE
Property tax is one of the largest items required to be paid as part of closing costs when property is purchased. In Maryland, property tax is due at the beginning of the taxable year, which is July. If the seller has paid the tax for the year, the buyer must reimburse the seller for the property tax that applies for the part of the taxable year remaining after the purchase. In addition, lenders usually require property taxes to be paid into an escrow account for each month of the taxable year, plus an additional month or two for security.
In order to reduce the impact at closing of requiring prepayment of a full year of property taxes, numerous proposals over the years have attempted to provide for payment of property taxes on a semiannual basis to reduce the amount that has to be reimbursed to the seller or otherwise paid at closing. Chapter 408 of the Acts of 1993 authorized, but did not require, counties and municipal corporations to allow the semiannual payment of property taxes.
Chapter 123 of the Acts of 1995 required counties and municipal corporations to provide an optional semiannual payment schedule that allowed owners of owner-occupied residential property to elect to pay property tax on a semiannual basis. This semiannual payment program was applicable to tax years beginning after June 30, 1996 and replaced the prior optional program that only Baltimore City and Harford County had implemented. For purchases on or after July 1, 1996, Chapter 123 of the Acts of 1995 allowed the purchaser to elect a semiannual payment schedule for the following taxable year. Furthermore, the taxing authority was authorized to impose a service charge with the second payment for lost interest and administrative expenses resulting from the semiannual payment election.
In spite of this statewide semiannual payment program, only three percent of State residents have taken advantage of the option. The Federal Housing Administration rates Maryland as having the second highest closing costs in the United States. Property taxes represent about 20 percent of closing costs in most jurisdictions in the State and up to 40 percent in Baltimore City. Thus, in a further attempt to lower closing costs in the State, Senate Bill 677/House Bill 897 (both passed) make the semiannual payment program for owner-occupied residential property mandatory.
As a result of Senate Bill 677/House Bill 897, many property owners who have paid property taxes into escrow in excess of the semiannual payment amount will be entitled to a one time refund of the excess property taxes held in escrow. Taxing authorities are still authorized to add a service charge to the second of the two payments for administrative expenses and lost interest. However, Senate Bill 677/House Bill 897 allow a property owner who elects to pay the full year's property tax on or before September 30 of the taxable year to avoid the service charge for lost interest and administrative expenses. Furthermore, under the bills, if an escrow account is established for the payment of property tax, the escrow account servicer must pay property tax in semiannual installments unless notified by a property owner to pay taxes in annual installments. The major provisions of Senate Bill 677/House Bill 897 generally have a delayed effective date of July 1, 2000.
Semiannual Payment Election by Purchaser in Current Taxable Year
The Attorney General's office recently clarified that, under existing law, a property buyer may not elect to pay property taxes on a semiannual basis for the current tax year unless the property being purchased is already subject to a semiannual payment schedule and the transfer occurs between July 1 and January 1. Senate Bill 677/House Bill 897 repeal this restriction, effective July 1, 1999, so that a home buyer who purchases a home between July 1 and September 30 can immediately begin to pay property taxes on a semiannual basis. This same restriction has been repealed in House Bill 85 (passed).
Service Charges for Semiannual Installments
Under existing law, the service charge for semiannual payment is required to be calculated in an amount reasonably equivalent to the anticipated lost interest income associated with the delay in payment of the second installment. Senate Bill 677/House Bill 897 clarify that the service charge is to be calculated based on a 3-month delay in payment and limit the lost interest to 1.5% of the amount of the second installment.
Under current law, the Department of Assessments and Taxation is required to approve the format of property tax bills, the amount of the service charge for property tax paid in semiannual installments, and the semiannual payment schedule. Senate Bill 60 (failed) would have repealed these requirements. In lieu of those requirements, the bill would also have required local taxing authorities to report to the Department each July 1 on the service charges adopted for semiannual property tax payments.
TAX CREDITS FOR NEW OR EXPANDED BUSINESS PREMISES
Senate Bill 779/House Bill 1148 (both passed) authorize a county or municipal corporation to grant enhanced tax credits against the real and personal property tax imposed on qualifying new or expanded business premises located within its jurisdiction. If an enhanced property tax credit for new or expanded business premises is granted by a county or municipal corporation, under the bills the qualifying business entity or its affiliates may also claim an enhanced State tax credit, based on the property tax imposed on the new or expanded business premises, against the individual or corporate income tax, the insurance premiums tax, or financial institution franchise tax. See the discussion of Senate Bill 779/House Bill 1148 under the subpart "Miscellaneous Taxes" in this Part B - Taxes of this plaini 90 Day Report.
PROPERTY TAX SALES
High Bid Premiums for Group and Sealed Bid Sales
As a result of disputes and litigation stemming from high bids on properties that were offered for tax sale, Chapters 326 and 786 of 1998 authorized county property tax collectors to establish a high-bid premium to be applied to all properties offered for tax sale. Under the law, any high-bid premium is 20% of the amount by which a property's highest bid exceeds 40% of that property's full cash value. House Bill 1183 (passed) is an emergency bill that requires a property tax collector to establish a high-bid premium for all properties that are sold at a tax sale in groups or by a sealed bid process (a sealed bid process is a method of sale whereby confidential bids are submitted to be opened at a predetermined place and time).
Limit on Expense Reimbursement - Allegany and Garrett Counties
House Bill 520 (passed) adds Allegany County and Garrett County to the list of counties in which a plaintiff in an action to foreclose on a right of redemption or a tax sale certificate holder is not entitled to reimbursement for expenses incurred in an action to or preparation for any action to foreclose a right of redemption on a property within four months of a tax sale.
STATE PERSONAL PROPERTY TAX
Prior to 1983, a credit for State personal property taxes paid was allowed against the State corporate income tax. In 1983, for the purpose of simplifying State tax law, a personal property tax exemption was created. However, because personal property tax revenues were pledged to help support debt service on previously issued State bonds, the effective date of the exemption was delayed until those bonds were redeemed. In the meantime, the law required the Board of Public Works to certify a zero State personal property tax rate. Because these bonds have all been redeemed, there is no need for the Board of Public Works to continue to certify a zero State personal property tax rate.
Senate Bill 71 (Ch. 29) exempts all personal property from the State property tax and repeals the requirement that the Board of Public Works certify a zero State personal property tax rate. Additionally, because Frederick, Kent, Queen Anne's, and Talbot Counties do not impose a personal property tax, businesses in these counties will no longer be required to file the same personal property tax return that businesses are required to file in the counties that impose the tax. Although businesses in Frederick, Kent, Queen Anne's, and Talbot Counties will still be required to file a tax return for purposes of compiling State assessable base data, a short form will now be used with minimal reporting requirements.
PROPERTY TAX RELIEF
Tax Credits
Senate Bill 395/House Bill 262 (both passed) authorize a county or municipality to grant, by law, a property tax credit against the county or municipal corporation property tax imposed on real property containing a vacant or underutilized commercial building that was built and last used for office, industrial, or other commercial purposes and is renovated for use primarily as housing.
House Bill 746 (passed) authorizes a county or municipality to grant, by law, a property tax credit against the county or municipal corporation property tax imposed on athletic fields used exclusively for amateur sports.
Under current law, a 100% property tax credit is granted for conservation property donated to the Maryland Environmental Trust that is unimproved, not used for commercial purposes, and subject to a perpetual conservation easement. In addition, a county or municipality may grant a property tax credit against the county or municipal corporation property tax imposed on conservation land or property owned by a land trust that is certified by the Maryland Environmental Trust. House Bill 521(passed) extends the current provisions to property that is donated to the Maryland Environmental Trust on or after July 1, 1991 and is subject to a perpetual conservation easement by authorizing a county or municipality to grant, by law, a real property tax credit against the county or municipal corporation property tax imposed on that property.
Senate Bill 504 (passed) authorizes a county or municipality to grant a property tax credit against the county or municipal corporation property tax imposed on property owned by the Audubon Naturalist Society of the Central Atlantic States, Inc. The credit may only be granted if the property is used for public environmental education, or for the maintenance of either a wildlife sanctuary or a natural area. Furthermore, under the bill, if a county grants the property tax credit, a credit against the State property tax, in the same percentages and for the same duration, is automatically granted.
PROPERTY TAX ADMINISTRATION
Personal Property Tax - Unpaid Tax Liens
Historically, in the State, only liens for unpaid real property taxes have been granted priority above other liens, including those held by mortgage lenders. Lenders could fairly easily protect themselves from the risk posed by granting priority to these liens by requiring the establishment of a tax escrow for real property taxes. More recently, however, the law has been interpreted to give the same priority to liens against real property for unpaid personal property taxes. This interpretation has created a problem for lenders because they have no way of controlling for the risk of a borrower not paying personal property taxes, particularly if the personal property was purchased after the real property was underwritten. In order to eliminate this risk, Senate Bill 515/House Bill 193 (both passed) make any liens placed on real property for unpaid personal property taxes subordinate to any previously filed liens.
Supervisors of Assessments - Residency Requirements
The State Department of Assessments and Taxation has found it increasingly difficult to find qualified candidates for supervisor of assessments who are or are willing to become county residents in order to take the position. Because of difficulties that Baltimore City was having in locating qualified candidates who were or would become residents of the city, Chapter 697 of 1986 was enacted and authorized the city to waive the residency requirement for supervisors of assessments. Senate Bill 58 (Ch.27) extends the waiver authority to the remaining counties in the State. The bill provides that the residency requirement is deemed waived if the county includes the name of a nonresident on the list of nominees submitted to the Director of Assessments and Taxation. Thus, by including or failing to include nonresidents on the county's list of nominees for supervisor of assessments, county governments now have the ability to determine whether or not they wish to have nonresidents appointed to the position.
Property Tax Setoffs in Municipalities - Frederick County
Several counties are required under current law to grant a property tax setoff to municipal corporations that provide services or programs that are similar to county services or programs. The setoff is: (1) the difference between the general county property tax rate and the property tax rate that is set for assessments of property in a municipal corporation; or (2) a payment to a municipal corporation to aid the municipal corporation in funding services or programs that are similar to county services or programs. House Bill 1212 (passed) adds Frederick County to the list of counties that are required to grant a property tax setoff when municipal corporations provide services in place of the county. Under current law, Frederick County may, but is not required to, establish a property tax setoff.
Full Cash Value Assessment - Truth in Taxation
One of the more significant legislative proposals related to property tax during the 1999 Session failed. House Bill 392 (failed) attempted to address a problem experienced when State and local property tax rates in Maryland are compared to tax rates in other states. In Maryland, the State and local tax rates are applied to real property assessments that are equal to 40% of value. The tax rates are therefore 2.5 times what they would be if applied to assessments that equal the full value of the property. House Bill 392 would have changed the method of assessing real property from 40% of value to full value. The bill also would have required a simultaneous reduction in property tax rates so that the change remained revenue neutral.
BALTIMORE CITY
House Bill 559 (passed) is an emergency bill that creates a property tax exemption for economic development projects located in urban renewal areas in Baltimore City for which the owners of the project and the Baltimore City Board of Estimates negotiate a payment in lieu of taxes agreement. The exemption is loosely based on an exemption created under Chapter 403 of 1996. As defined in the bill, "economic development project" includes significant projects such as hotels, office buildings, retail facilities, and multifamily residential facilities. Minimum investments range from $2.5 million to $20 million, depending on the type of facility, for new construction or rehabilitation, with minimum levels of equity investment stipulated in the bill. The "urban renewal areas" named in the bill include the Inner Harbor area, Market Center, Charles Center, Harbor Campus, and Key Highway, among others. The bill also specifies the conditions that must be met to be eligible for the exemption, including demonstrating the economic feasibility and the public benefit of the project and negotiating a payment in lieu of taxes with the Baltimore City Board of Estimates.
Chapter 403 of 1996 authorized Baltimore City to negotiate a tax exemption and a payment in lieu of taxes (PILOT) for a five year period for development meeting certain criteria in urban renewal areas located in Baltimore City. Senate Bill 161 (passed) repeals this exemption. House Bill 559 makes an economic development project eligible for the exemption provided under that bill if a PILOT was regulated under the provisions repealed by Senate Bill 161.
BALTIMORE COUNTY
Senate Bill 477/House Bill 155 (both passed) authorize Baltimore County to grant, by law, a credit against the county property tax imposed on personal property owned by the Genesee Valley Outdoor Learning Center, Inc.
GARRETT COUNTY
Senate Bill 665 (passed) authorizes Garrett County to grant, by law, a credit against the county property tax imposed on property of the Avilton Community Association, Inc.
MONTGOMERY COUNTY AND PRINCE GEORGE'S COUNTY
House Bill 555 (passed) provides that the property tax exemption granted to land that is used for a concession located in a public airport, park, market, or fairground and that is available to the general public does not apply to property owned by the Maryland-National Capital Park and Planning Commission in Prince George's County that is located in a public airport and is used for a restaurant concession.
PRINCE GEORGE'S COUNTY
House Bill 821 (passed) authorizes Prince George's County to grant a property tax credit against county or special district property tax imposed on property owned by a Boys and Girls Club that is chartered by the Prince George's County Boys and Girls Club, Incorporated.
QUEEN ANNE'S COUNTY
House Bill 1215 (passed) authorizes Queen Anne's County to grant a property tax credit against real property owned by the Wildfowl Trust of North America, Inc. that is used solely for specified purposes.
TALBOT COUNTY
Senate Bill 708/House Bill 1096 (both passed) authorize Talbot County to grant a property tax credit against the county property tax imposed on new construction or a substantial improvement to real property that is owned or occupied by a business that is or will be doing business in Talbot County.
Senate Bill 756/House Bill 1025 (both passed) authorize Talbot County or a municipality in Talbot County to grant a credit against the county or municipal corporation property tax imposed on certain personal property owned by Chesapeake Wildlife Heritage, Inc. if the property is used primarily for the purpose of the organization and is not used primarily for revenue or income producing purposes.
WICOMICO COUNTY
House Bill 1020 (passed) authorizes Wicomico County to grant, by law, a property tax credit against the county property tax imposed on agricultural land and agricultural easements, not including improvements, that are located in an agricultural preservation district.
INDIVIDUAL INCOME TAX
In contrast to the past two sessions, the 1999 legislative session saw relatively little activity in the income tax area. Income tax relief had been a major theme in the November 1994 State and federal elections. Income tax reduction was considered in each subsequent legislative session until 1997, when the General Assembly enacted Chapter 4 of the Acts of 1997 providing a 10% reduction in State income taxes, beginning in tax year 1998 phased in at 2% per year for five years. Better than anticipated revenue growth enabled the General Assembly to consider further tax reductions in 1998, and legislation was enacted to accelerate the phase in of the tax cut. Under Chapter 4 of the Acts of 1998, the reduction in 1998 was increased to 5% rather than 2% and the tax cut in 1999 was raised to 6% from 4%. Combined, the tax reduction packages enacted in 1997 and 1998 returned about $322 million to taxpayers in fiscal 1999. Additional tax relief was provided for low income wage earners through Chapter 5 of the Acts of 1998 which made part of the earned income credit refundable for income tax purposes.
While various proposals to further accelerate the tax cut and to provide tax relief to retirees were raised in the 1998 gubernatorial race and, again, during the legislative session, these proposals did not gain much momentum. In the area of tax legislation, the tobacco tax and electric and gas tax reform legislation took precedence over most matters in the 1999 Session. The General Assembly did, however, pursue the issue of simplifying the State tax form by revising the computation of county income taxes.
County Income Tax
The 1997 Income Tax Reduction Act held the counties harmless from the 10% phased-in income tax reduction. That Act provided for the calculation of the county income tax without regard to the State tax changes made, so that county income tax revenues would not be affected. Under the Act, the county piggyback rate is applied to a "base amount" equal to the pre-tax cut State income tax. In so accommodating the counties, use of the State's short tax form was made impossible, leaving only the long form for all filers to fill out. Under current law, the State tax liability has to be calculated twice, confusing taxpayers and resulting in a significant number of errors. The Comptroller's Office and the General Assembly received many complaints regarding the complicated tax forms filers were required to complete for the first time this year.
In an effort to address the problem, several bills were proposed in the 1999 Session. Senate Bill 342/House Bill 876 (both failed) would have re-coupled the county income tax to the State income tax. The bills would have returned the State and county tax calculation to its earlier form prior to the implementation of the State tax cut. By doing so, it would have allowed the income tax cuts to flow through to the counties and the municipalities, significantly reducing county income tax revenues unless the counties increased their tax rates.
House Bill 1149 (passed) replaces the current system of calculating local income taxes based on a percentage of the State tax liability by establishing flat county income tax rates that will be used to calculate local income taxes based on Maryland taxable income. County income tax rates will range between 1% and 3.2% using the new computation. The new county rates adjust for the higher personal exemption amounts as a result of the 1997 and 1999 tax reductions, which flow through to the computation of the county income tax under the new computation. The table below shows the impact on the counties with the rates established under House Bill 1149 for tax years 1999 through 2002 . The bill provides that the rates specified for a county in the bill would be preempted by county rates established by the county by ordinance or resolution through the normal process as prescribed in statute.
Revenue Impact of House Bill 1149
Tax Year (in $)
| 1999 | 2000 | 2001 | 2002 | TOTAL | |
| Allegany | $18,524 | $16,137 | $30,555 | $27,563 | $92,779 |
| Anne Arundel | 222,540 | -222,232 | 118,457 | -27,554 | 91,211 |
| Baltimore | 614,114 | 54,448 | -18,020 | 326,320 | 435,514 |
| Baltimore City | 255,486 | 50,579 | 165,786 | -36,338 | 435,514 |
| Calvert | -7,815 | 30,568 | -37,868 | 13,706 | -1,409 |
| Caroline | 12,387 | -6,616 | 2,825 | 22,696 | 31,292 |
| Carroll | -74,831 | 49,572 | -98,182 | 27,109 | -96,332 |
| Cecil | 9,084 | -40,320 | -10,340 | 19,474 | -22,102 |
| Charles | 66,449 | -17,867 | 74,509 | 12,454 | 135,546 |
| Dorchester | 2,319 | 3,366 | 15,861 | 20,460 | 42,006 |
| Frederick | 97,484 | -87,304 | 76,612 | -1,066 | 85,726 |
| Garrett | 9,705 | 9,450 | 4,555 | 9,931 | 33,641 |
| Harford | 62,562 | -117,728 | 122,460 | 99,282 | 166,576 |
| Howard | 75,207 | 236,646 | 159,378 | -180,516 | 290,715 |
| Kent | 11,540 | 8,459 | 3,246 | 3,373 | 26,618 |
| Montgomery | 789,313 | -418,189 | -857,327 | 30,996 | -455,206 |
| Prince George's | -231,320 | -194,433 | -321,242 | 646,681 | -100,315 |
| Queen Anne's | 11,757 | -25,402 | -7,042 | 15,806 | -4,882 |
| St. Mary's | -44,849 | -1,213 | 29,781 | 12,296 | -3,985 |
| Somerset | -1,634 | -3,547 | 10,606 | 6,675 | 12,100 |
| Talbot | 15,197 | -23,983 | -12,746 | -26,620 | -48,153 |
| Washington | 50,570 | -3,426 | 20,906 | 54,620 | 122,298 |
| Wicomico | 30,424 | 40,762 | 19,772 | 8,655 | 99,614 |
| Worcester | 23,759 | -18,693 | -454 | -8,654 | -4,042 |
| TOTAL | $2,017,971 | -$680,963 | -$507,915 | $1,076,978 | $1,906,071 |
Additionally, in order to facilitate the simplification of the computation of the county income tax, House Bill 1149 eliminates the two-earner subtraction adjustments for the phase in of the State tax reduction and maintains it at $1,200. This provision is expected to result in General Fund revenue loss of about $1.7 million in fiscal 2000. The bill also makes adjustments to the calculation of the earned income credit and the poverty level credit for low-income wage earners to correspond with the new method for calculating county taxes. Combining all these changes, House Bill 1149 essentially continues to hold the counties harmless from the 1997 Income Tax Reduction Act. In addition, it also allows the return of the short form for almost half a million Marylanders that do not itemize deductions, and for those that do, the long form will be significantly easier and more logical to fill out.
ONE MARYLAND ECONOMIC DEVELOPMENT PROGRAM FOR DISTRESSED COUNTIES - TAX CREDITS
House Bill 4 (passed) allows tax credits for eligible project costs and eligible start-up costs for specified categories of businesses that establish or expand business facilities in a "qualified distressed county" when the business activity creates 25 or more new full-time positions. The credit may be taken for qualified project costs only if those costs exceed $500,000. The amount of credit that may be claimed by a qualified business is limited to $5 million for project costs and $500,000 for start-up costs. A qualified business entity is allowed to carry-forward both credits for 14 years. After the fourth year, the credit is refundable, although the refund that may be taken in any year is limited by the amount of taxes the business is required to withhold for the taxable year for wages of qualified employees.
House Bill 4 defines a "qualified distressed county" as one with an average unemployment rate that exceeds 150% of the statewide average unemployment rate or has an average per capita personal income that is equal to or less than 67% of the average statewide per capita personal income. Seven counties qualify as distressed under the above definition - Allegany, Baltimore City, Caroline, Dorchester, Garrett, Somerset, and Worcester.
House Bill 4 has a companion bill, House Bill 5 (passed), which creates a Smart Growth Economic Development Infrastructure Fund within the Department of Business and Economic Development (DBED) to be used for making loans to qualified distressed counties, including Baltimore City. The fiscal 2000 budget includes $10 million in PAYGO general funds to capitalize the Smart Growth Economic Development Infrastructure Fund. See the discussion under the heading "New Economic Development Program and Funding" in Part H - "Business and Economic Issues" of plaini The 90 Day Report.
MARYLAND HIGHER EDUCATION INVESTMENT PROGRAM
During the 1998 legislative session, the General Assembly enacted legislation that provides Maryland residents with a method of saving for college tuition, through the State's prepaid tuition program, that is free from State taxes. Chapter 572 of the Acts of 1998 provided taxpayers a subtraction modification of up to $2,500 for the contributions made towards the purchase of a prepaid tuition contract. Under the 1998 Act, contributions in excess of $2,500 could not be carried forward and the limitation of $2,500 applied to each taxpayer, regardless of the number of contracts purchased by the taxpayer. Senate Bill 8 (Ch. 77)/House Bill 28 (passed) allow taxpayers to carry forward contributions in excess of $2,500. For a contribution in excess of $2,500 for any taxable year, the purchaser may subtract up to $2,500 each year until the full value of the contribution has been allowed as a subtraction modification. In addition, the $2,500 subtraction modification may be taken for each prepaid tuition contract purchased. The Act applies retroactively to contracts purchased in 1998.
TAX RELIEF FOR HOLOCAUST VICTIMS
Senate Bill 229 (passed)/House Bill 177 (Ch. 117) provide tax relief for victims of Nazi persecution. The bills create an income tax subtraction modification for: (1) income related to recovered Holocaust assets; and (2) reparation/restitution payments made to a Holocaust victim, or the victim's spouse or descendant. An exemption against the State inheritance tax for the above mentioned assets and distributions is also allowed. The exclusion from the State income tax and inheritance tax applies to interest on the proceeds received on specified insurance policies. The tax exemption applies only to the first recipient of the assets after their recovery and only if the recipient is a victim of Nazi persecution, or a Holocaust victim's spouse or descendant. The exclusion does not apply to assets acquired with the proceeds from the sale of the recovered Holocaust assets.
Senate Bill 229/House Bill 177 also create the Holocaust Victims Insurance Act, which establishes the Maryland Insurance Administration as a point-of-entry for individuals seeking assistance with holocaust victims' insurance policies. See the discussion under the "Insurance" heading of Part H - "Business and Economic Development" of plaini The 90 Day Report for more details.
INCOME TAX CREDIT FOR CHILD AND DEPENDENT CARE EXPENSES
Individuals are currently able to take a credit against their federal taxes for child and dependent care expenses if it enables them to work. Taxpayers may also take a State income tax subtraction modification for child and dependent care expenses. Senate Bill 631/House Bill 7 (both passed) create an additional nonrefundable State tax credit for the same expenses. The credit allowed is up to 25% of the federal credit claimed by the individual for that taxable year, but not more than the taxpayer's State income tax for the taxable year. The credit is available to qualified individuals whose federal adjusted gross income is at or below $40,000 or $20,000 if married filing separately; the full credit is available to those with federal adjusted gross income of $30,000 or less ($15,000 or less if married filing separately), and it phases out for incomes between $30,000 and $40,000 ($15,000 and $20,000 if married filing separate returns). The legislation is estimated to cost the State about $4 million each year, beginning in fiscal 2001.
Senate Bill 631/House Bill 7 require the Office of the Comptroller to study the effectiveness of the tax credit program, including identifying the individuals claiming the credit, the appropriateness of the credit amount, and the cost-effectiveness of the credit in achieving State goals. The Comptroller must report the findings of the study to the House Committee on Ways and Means and the Senate Budget and Taxation Committee by December 1, 2001.
INDIVIDUAL INCOME TAX CREDIT FOR CRITICAL SKILLS TRAINING
Senate Bill 423/House Bill 1176 (both passed) create an income tax credit for tuition and related expenses that are required for enrollment in an approved program that provides training in skills that are in short supply and critical to Maryland's economic development strategy. The credit against the personal income tax is 30% of up to $5,000 in qualified expenses for the individual, spouse, or dependent during the taxable year. The full amount of the credit is available to individuals whose federal adjusted gross income is at or below $65,000 ($32,500 if married filing separately) and it is reduced by 5% for every $1,000, or fraction thereof, that federal adjusted gross income exceeds $65,000 (or 5% for every $500, or fraction thereof, if married filing separately).
The individual claiming the credit must commence employment in the State in an occupation directly related to the approved program within one year of completion of the program and remain in that job for one year for each year that a credit was claimed. Otherwise, the credit claimed will be recaptured for each year that the service obligation is not satisfied.
The Secretary of the Maryland Higher Education Commission, in consultation with various State agencies, is required to identify and designate work-related skills that are in short supply and critical to Maryland's Economic Development Strategy and establish a list of approved programs that qualify for the tax credit. The proposed designation of critical work-related skills and any modifications to the designations must be submitted to the Joint Committee on Administrative, Executive, and Legislative Review for review by November 1 each year.
TAX CREDIT FOR EMPLOYER-PROVIDED COMMUTING BENEFITS
Supplementing federal and county-level subsidy programs for commuting expenses, Senate Bill 390/House Bill 636 (both passed) create a tax credit for employers that provide commuting benefits to their employees. The credit is equal to 50% of the cost of ride-share commuting expenses provided by the employer, subject to a maximum credit of $30 per employee per month. Eligible employer-provided commuter expenses are those that cover multiple-seating vehicle transportation costs and mass-transit transportation costs. The credit is not refundable and may not be carried forward. General fund revenues are estimated to decrease by $1.1 million in fiscal 2001 as a result of the credit.
OTHER INCOME TAX BILLS
Income Tax - United States Coast Guard Auxiliary Members
Senate Bill 655/House Bill 441 (both passed) add members of the United States Coast Guard Auxiliary to the list of qualified volunteer fire, rescue, or emergency medical services members who are entitled to a $3,500 income tax subtraction modification for volunteer services. The subtraction modification is allowed only if the volunteers meet specified qualifications, such as having been an active member for at least 72 months during the last 10 calendar years. About 927 individuals are expected to qualify for the subtraction modification in fiscal 2000.
Electric and Gas Utility Tax Reform
Senate Bill 344/House Bill 366 (Chs. 5 and 6) restructure taxes imposed on the electric and gas utility industries to account for retail competition in these industries. See the discussion of Senate Bill 544/House Bill 366 under the subpart "Miscellaneous Taxes" within this part of plaini The 90 Day Report.
Tax Credits - New or Expanded Business Premises
Senate Bill 779/House Bill 1148 (both passed) authorize a county or municipal corporation to grant enhanced tax credits against the real and personal property tax imposed on qualifying new or expended business premises located within its jurisdiction. If an enhanced property tax credit for new or expanded business premises is granted by a county or municipal corporation, under the bill the qualifying business entity or its affiliates may also claim an enhanced State tax credit, based on the property tax imposed on the new or expanded business premises, against the individual or corporate income tax, the insurance premiums tax, financial institution franchise tax, or public service company franchise tax. See the discussion of Senate Bill 779/House Bill 1148 under subpart "Miscellaneous Taxes" within this part of plaini The 90 Day Report. For more discussion regarding the economic development component of the bills, see under the "New Economic Development Program and Funding" heading of Part H - "Business and Economic Issues" of plaini The 90 Day Report.
Quality Teacher Incentive Act of 1999
As an incentive to encourage public school teachers to obtain professional certification, House Bill 9 (passed) enables a public school teacher to claim a credit against the State income tax of up to $1,500 for tuition paid by the individual for graduate level courses required for maintaining certification beginning in fiscal 2001. Approximately 13,800 teachers are seeking either a standard professional certificate II which requires six credit hours of course work or an advanced professional certificate which required a master's degree or 36 hours of course work. Teachers have three years to obtain a standard professional certificate II and ten years to obtain a master's degree. General fund revenues are estimated to decrease by $11 million in fiscal 2001 as a result of the tax credit provision in House Bill 9. For a discussion of the other provisions in House Bill 9, see the heading "Teacher Incentive Programs" in Part L - "Education" of plaini The 90 Day Report.
SALES TAX RELIEF FOR COMMERCIAL TELEVISION STATIONS FOR DIGITAL CONVERSION
House Bill 1131 (failed) would have exempted from the sales and use tax digital telecommunications machinery or equipment that enables a television or radio station to originate and broadcast, or receive and broadcast, digital signals and that was purchased to comply with the federal Telecommunications Act of 1996. The sales tax exemption would have been granted for ten years.
Pursuant to the federal Act, the four large Baltimore commercial television stations have to provide some on-air digital programming by November 1999 and the remaining six Maryland commercial television stations have to broadcast digital signals by May 2002. Maryland's six public television stations are required to broadcast digital television by May 2003. The commercial television stations contend that digital conversion is expected to cost at least $40 million over a six-year period. House Bill 1131 would have provided some financial relief for the commercial stations. The value of the sales tax on $40 million of new purchases is $2 million. Maryland's public television stations are expected to spend about $56 million for digital conversion over seven years. Public television stations are receiving some federal financial assistance for capital project costs. Although the federal Act does not apply to radio stations, those that share broadcasting facilities with television stations could be indirectly affected by the federal Act if they are displaced from their current facility. Thus, some radio stations might have claimed the sales tax exemption under House Bill 1131.
SALES TAX EXEMPTION FOR VENDING SALES OF WHOLESOME FOODS
Senate Bill 7/House Bill 259 (both passed) exempt from the sales and use tax vending machine sales of milk, fresh fruit and vegetables, and yogurt. Vending machine sales of these items are estimated to be around $3 million in fiscal 2000.
Prepaid Telephone Calling Arrangements
Senate Bill 726/House Bill 1130 (both passed) exempt a "prepaid telephone calling arrangement" from the gross receipts tax and instead impose the sales and use tax. The sale or recharge of a prepaid telephone calling arrangement is taxable if: (1) it takes place at the vendor's place of business located in the State; (2) the buyer's shipping address is in the State; or (3) there is no item shipped and the buyer's billing address or the location associated with the buyer's mobile telephone is in the State. The sales and use tax does not apply to the use of a taxable service obtained by using a prepaid telephone calling arrangement. The changes to the gross receipts tax and the sales and use tax result in a general fund increase of about $2 million in fiscal 2000. For a more detailed discussion, see the Public Service Companies section of Part H - "Business and Economic Issues" of the 90 Day Report.
ELECTRIC AND GAS UTILITY TAX REFORM
Introduction
As has occurred in the telecommunications, natural gas, and airline industries, the electric utility industry is in the process of transition from a regulated monopoly industry to a competitive market. For over two years, as the Maryland Public Service Commission has continued examining the issues regarding the transition to a competitive market for electricity, the General Assembly has been involved in studying the complex issues surrounding the prospect of retail electric competition in Maryland. The Electric Customer Choice and Competition Act of 1999, Senate Bill 300/House Bill 703 (Chs. 3 and 4), providing for electric customer choice and the restructuring of the electric utility industry in the State beginning July 1, 2000, represents the culmination of the General Assembly's extended study of those issues. See the discussion of Senate Bill 300/House Bill 703 under the subpart "Public Service Companies" in Part H - Business and Economic Issues of this 90 Day Report.
Under Senate Bill 300/House Bill 703, the availability of electric customer choice was made contingent on the enactment of legislation by the General Assembly to address the State and local tax implications of restructuring the electric utility industry. The 1999 General Assembly enacted Senate Bill 344/House Bill 366 (Chs. 5 and 6) to restructure Maryland's utility tax system and satisfy the contingency under Senate Bill 300/House Bill 703.
Early on in the General Assembly's study of the issues surrounding electric competition, it was recognized that one particular issue that the General Assembly would need to address before allowing retail electric competition in the State would be the State and local tax ramifications of allowing competition. As part of its study during the 1997 interim, the Task Force to Study Retail Electric Competition and the Restructuring of the Electric Utility Industry, established by Chapter 106 of the Acts of 1997, specifically examined the tax issues associated with the introduction of retail electric competition. As a result of the Task Force's study, a consensus developed that action must be taken by the General Assembly to revise the State's electric utility taxes before the introduction of retail electric competition in the State. While it was recognized that further study would be required, the issue was formally put before the General Assembly during the 1998 session by the introduction of two bills that failed, House Bills 1322 and 1323, which would have made significant changes to the taxation of electric utilities in the State.
During the 1998 interim, the Senate Budget and Taxation Committee and the House Committee on Ways and Means held numerous joint meetings to examine in detail the State and local implications of retail electric competition and various suggestions for tax reform. Those joint meetings led to the development of a proposal for tax reform which became Senate Bill 344/House Bill 366.
Background
The current structure of Maryland State and local taxation of the electric industry, which is based on the monopoly structure of the industry, is ill-suited for retail electric competition. Without changes to the existing tax structure, retail electric competition would result in disparate taxation among competing providers, creating competitive inequities and distorting the "level playing field" desired for a competitive industry. Without tax law changes, the introduction of retail electric competition in the State also would have significant revenue implications for the State's public service company franchise tax and for local property taxes.
In particular, it has been estimated that retail electric competition without changes to the State's public service company franchise tax could have resulted in a reduction of annual State tax revenues of as much as $40 to $50 million, as sales shifted to untaxed nonutilities or out-of-state utilities. In the case of natural gas, which is taxed similarly to electricity, retail competition has already developed, without any tax changes, resulting in an estimated $6 to $7 million annual "leakage" from the public service company franchise tax. Under current law, the public service company franchise tax would result in a clear disparity in the State taxation of competing providers since a utility's revenues from sales of electricity would be subject to the 2% gross receipts tax while a nonutility's revenues would not.
Another major concern was the heavy property tax burden currently imposed on electricity generation facilities in the State. In total, property owned by electric utilities accounts for about 5 3/4% of the total property tax base in the State, resulting in $200 million annually in local property tax revenues. About $115 million of these existing revenues relates to property used in the transmission and distribution of electricity, which will not be affected by retail competition in the industry. The other $85 million is imposed on generation facilities in the State, raising significant concerns regarding the ability of in-State generation facilities to compete in a competitive market where they will be subject to the same interstate competitive pressures as manufacturers are generally.
In particular, real property at generation facilities is subject to tax on 100% of its value, rather than 40% as is the case for ordinary business. More significantly, the machinery and equipment used to generate electricity is not treated like other "manufacturing" machinery and equipment under the property tax. While personal property used in generating electricity is subject to tax on 100% of its value, most personal property used in manufacturing is 100% exempt from property taxation. About $72 million annually in local property tax revenue is attributable to the taxation of personal property at generation facilities.
Senate Bill 344/House Bill 366
Senate Bill 344/House Bill 366 restructure the State's taxes on the electric utility industry to account for the introduction of retail electric competition and the restructuring of the industry. Under the Acts, the gross receipts tax on revenues from the sale of electricity is replaced with a tax based on kilowatt hours of electricity delivered for final consumption in the State. To avoid further revenue losses anticipated to result from expanded availability of competition in natural gas markets, the changes to the public service company franchise tax under the Acts are made applicable to gas utilities as well, with the gross receipts tax on revenues from the sale of natural gas being replaced with a tax based on terms of natural gas delivered for final consumption in the State.
The Acts also impose the corporate income tax on electric and gas utilities. The Acts provide limited transitional credits against the corporate income tax for certain multijurisdictional electric companies, to cushion a shift of tax burdens among the utilities that is anticipated to occur as a result of the restructuring under the Acts.
Property tax relief for electric generation facilities in the State is also provided under the Acts. For relief from the 100% assessment of real property used in generation, the Acts allow a credit against the State income tax for 60% of the property taxes paid by an electric utility. For relief from personal property taxes on generation facilities, the Acts provide a 50% exemption from property tax, phased in over two years, with State reimbursements to the affected counties (i.e., the counties where the generation facilities are located) for roughly two-thirds of the costs of the property tax relief. Under the Acts, the kilowatt hour-based tax on electricity delivered for final consumption has been set at a level estimated to allow for recovery of about half of the State's costs to reimburse the counties, with the net effect that the costs of the property tax relief will be shared roughly equally among the counties, the State, and electric consumers.
Among other changes made under the Acts, various technical changes are made to the State's sales and use tax to account for retail competition in the electricity and natural gas markets. The Acts also require a joint study and report by the Comptroller, the Department of Assessments and Taxation, and the Public Service Commission, on or before September 15, 2003. The report is to evaluate the effectiveness of the Acts in achieving the General Assembly's goal of providing for an equitable and rational restructuring of State and local taxes on electric and gas utilities in light of competition and the restructuring of the electric and gas utility industries.
The Acts are generally effective January 1, 2000, applicable to tax years beginning on or after January 1, 2000. The Acts were made contingent on the enactment of the Electric Customer Choice and Competition Act of 1999, Senate Bill 300/House Bill 703. As discussed above, that contingency has been satisfied. (See the discussion of Senate Bill 300/House Bill 703 under the subpart "Public Service Companies" under Part H - Business and Economic Issues of this 90 Day Report.)
In fiscal year 2003, when the 50% personal property tax exemption and State reimbursements to the counties are fully phased, the overall estimated net costs of the Acts will be about $13.6 million to the State and about $8.5 million to the counties. The following table shows the estimated county by county impact of the Acts.
Illustrative Impact on Local Government for Fiscal 2003
County |
Property Tax Revenue Loss |
Effect on Aid |
State Grants |
Change in
Highway User Fees |
Total Impact |
| Allegany | ($59,006) | $59,583 | $577 | ||
| Anne Arundel | ($10,799,377) | 1,151,452 | $7,820,202 | 230,633 | (1,597,090) |
| Baltimore City | (627,549) | (479,579) | 453,421 | 313,950 | (339,757) |
| Baltimore | (2,499,648) | (563,992) | 1,794,835 | 330,853 | (937,952) |
| Calvert | (8,489,883) | 1,402,036 | 6,096,574 | 43,732 | (947,541) |
| Caroline | (25,304) | 38,389 | 13,085 | ||
| Carroll | (173,450) | 102,716 | (70,734) | ||
| Cecil | (89,149) | 57,703 | (31,446) | ||
| Charles | (3,512,976) | 435,801 | 2,522,612 | 69,097 | (485,466) |
| Dorchester | (258,603) | 21,597 | 187,442 | 43,935 | (5,628) |
| Frederick | (232,409) | 132,679 | (99,730) | ||
| Garrett | (16,583) | (29,934) | 11,907 | 49,715 | 15,105 |
| Harford | (1,198,801) | (68,004) | 860,767 | 118,836 | (287,202) |
| Howard | (375,081) | 116,691 | (258,390) | ||
| Kent | (24,548) | 22,080 | (2,467) | ||
| Montgomery | (3,823,330) | (965,177) | 2,765,553 | 338,622 | (1,684,332) |
| Prince George's | (10,745,238) | 530,376 | 7,744,806 | 293,773 | (2,176,283) |
| Queen Anne's | (54,276) | 41,979 | (12,296) | ||
| St. Mary's | (90,569) | 53,913 | (36,656) | ||
| Somerset | (15,750) | 26,444 | 10,694 | ||
| Talbot | (58,682) | 34,344 | (24,339) | ||
| Washington | (389,219) | (55,964) | 357,082 | 89,754 | 1,653 |
| Wicomico | (79,433) | 69,346 | (10,087) | ||
| Worcester | (93,323) | 51,232 | (42,091) | ||
| Total | ($42,361,207) | $7,632 | $30,615,201 | $2,730,000 | ($9,008,373) |
The Acts do the following:
Public Service Company Franchise Tax
Corporate Income Tax
Property Tax
Sales and Use Tax
Other Provisions
Maryland increased its tax on cigarettes twice in the past decade: in 1991, from $0.13 to $0.16; and in 1992 from $0.16 to $0.36. There have been proposals in the past several years to increase the cigarette tax further.
During the 1998 Session, there were several unsuccessful proposals that would have increased the cigarette tax by $1.50 per pack (from $0.36 to $1.86) over a three-year period. House Bill 763 (failed) would have dedicated the increase in revenues to elementary and secondary school construction, tobacco crop conversion, cancer prevention advertising, and drug and alcohol prevention and treatment. Senate Bill 614/House Bill 1073 (both failed) would have appropriated the additional revenue to designated special funds and programs focused on decreasing youth and teen smoking. Both proposals would have imposed a tax on tobacco products that are currently exempt, such as cigars and loose tobacco.
Before the 1998 elections, 89 legislators, the Governor and the Lieutenant Governor signed a pledge stating they would support the Maryland Children's Initiative and the tobacco tax plan. The plan included increasing the cigarette tax by $1.00 and using the revenues from the tax to support antismoking campaigns aimed at reducing underage smoking. Senate Bill 143 (failed) would have increased the cigarette tax from $0.36 to $1.36 per pack phased-in over two years ($0.50 in fiscal 2000 and $0.50 in fiscal 2001). The bill would have also altered the licensed wholesaler discount from 1.36% to .57% in fiscal 2000 and to .36% in fiscal 2001, and imposed a 25% tax on the wholesale price of other tobacco products.
House Bill 190 (passed) increases the cigarette tax by $0.30 per pack in fiscal 2000. In addition, the bill alters the licensed wholesaler discount from 1.36% to .82% in fiscal 2000, and imposes a 15% tax on the wholesale price of other tobacco products such as cigars and smokeless tobacco in fiscal 2001.
The bill requires the Governor to include a minimum of $21 million in the annual budget, beginning in fiscal 2001, for activities aimed at reducing tobacco use in Maryland as recommended by the Centers for Disease Control and Prevention. These activities include: (1) media campaigns aimed at reducing smoking initiation and encouraging smokers to quit smoking; (2) media campaigns educating the public about the dangers of secondhand smoke exposure; (3) enforcement of existing laws banning the sale or distribution of tobacco products to minors; (4) promotion and implementation of smoking cessation programs; and (5) implementation of school-based tobacco education programs. The cigarette tax, other tobacco tax, and wholesaler discount rate alteration will result in a general fund revenue increase of $91.7 million in fiscal 2000 and $76.0 million in fiscal 2001.
The bill is contingent on the passage of House Bill 751 (passed), which establishes the Cigarette Restitution Fund for the tobacco settlement payments and requires the Governor to appropriate the payments for specified purposes in the annual budget. Further discussion of House Bill 751 is contained in the Tobacco Settlement section of Part A - "Budget and State Aid" of The 90 Day Report.
INHERITANCE TAX
Inheritance Tax Rate
Senate Bill 398/House Bill 432 (both passed) alter the inheritance tax for property that passes from a decedent to, or for the use of, sibling heirs from 10% to 5% phased-in over three years (a 16.7% decrease in the collateral tax rate in each of the three years). In addition, the bills alter the inheritance tax rate for property passing to lineal heirs from 1% to 0.9%. The new inheritance tax rates apply to those decedents dying on or after July 1, 1999. The changes to the inheritance tax result in a general fund loss of $1.8 million in fiscal 2000 and $6.7 million in fiscal 2001.
Lien for Payment of Inheritance Tax
House Bill 434 (passed) eliminates the conflicting statutes regarding a lien against property for purposes of the inheritance tax. Specifically, the bill alters the provisions concerning the duration of a lien on property for the failure of a foreign (i.e., out-of-state) personal representative to pay inheritance tax by increasing the duration of the lien to correspond to that of a Maryland personal representative.
Victims of Nazi Persecution
Senate Bill 229 (passed) provides an inheritance tax exclusion for Holocaust victims. A more detailed discussion is in the Income Tax section of Part B - "Taxes" and the Insurance section of Part H - "Business and Economic Issues" of The 90 Day Report.
TAX CREDITS
New or Expanded Business Premises
Senate Bill 779/House Bill 1148 (both passed) create an enhanced tax credit for businesses that create new jobs for entities that substantially expand their businesses. If a business entity (or group of business entities) meets the requirements in the bill, it is granted a local property tax credit equal to 58.5% of the property tax imposed on the assessment of the new or expanded premises. The business may also claim a credit against certain State taxes, but not the public service company franchise tax, equal to 31.5% of its property tax for 12 years. The credit is for 12 years, beginning in the tax year following the date on which the requirements are met.
The bills also repeal the December 31, 2002 termination date applicable to the existing tax credit for businesses that create new jobs and alter the definition of a new permanent position (job) under the existing credit.
Currently, there is only one business entity that has expressed intent to expand its premises in a manner that qualifies for the new enhanced tax credit for businesses that create new jobs. If the affected county or municipal corporation grants the enhanced credit, the business will be able to utilize the enhanced credit beginning in fiscal 2006, when the new facilities are projected to be operational.
The table below presents the total value of the credits for this particular business under current law and under the bills. The range indicates the credits available under the three different location and expansion options currently being considered. The estimates reflect the total credits for the 12-year period and assume a 3% growth in the assessment.
Value of Credits for Potential
Business Expansion
12-Year Period
| Under Current Law | Under SB 779/HB 1148 | |
| Total Value of Credits | $2.7 - $8.3 million | $12.7 - $23.9 million |
| Amount Claimed Against State Taxes | $0.95 - $2.9 million | $4.4 - $8.4 million |
| Amount Claimed Against Local Taxes | $1.8 - $5.4 million | $8.3 - $15.5 million |
Senate Bill 779/House Bill 1148 are discussed further in Part H - "Business and Economic Issues" of The 90 Day Report.
Neighborhood Preservation and Stabilization
Senate Bill 86 (passed) extends the qualifying period for participation in the Neighborhood Preservation and Stabilization Act demonstration project. Under current law, individuals who purchase a personal residence in designated neighborhoods are eligible for property and income tax credits if the properties were purchased between July 1, 1996 and June 30, 1999. The bill extends that qualifying period by two years, to June 30, 2001, and expands the geographic area that qualifies for the credit. For purchases made from July 1, 1996 through June 1, 1999 the credit must be applied for by December 1, 1999. For homes purchased after June 1, 1999, the credit must be applied for within six months after the transfer of title of the property. The bill is effective June 1, 1999.
Certified Heritage Structure Rehabilitation Credit - Reciprocity with Other States
House Bill 1051 (passed) authorizes a business entity or individual to claim an income tax credit for qualified rehabilitation expenses incurred for rehabilitating a certified historic structure in another state if that state has a reciprocal historical rehabilitation tax credit program and agreement for taxpayers who rehabilitate structures in Maryland.
RECORDATION AND TRANSFER TAXES
Payment and Collection
Senate Bill 5/House Bill 709 (both passed) allow the county tax collectors, rather than the clerks of the courts, to collect recordation taxes beginning in fiscal 2000. In fiscal 2000 only, any county, with the exception of Prince George's County, that does not have the clerk of the court collect recordation taxes must remit to the Comptroller a fee equal to the fee that the clerk would otherwise deduct. Assuming all counties decide to collect the taxes themselves, general fund revenues will decrease by $5.7 million in fiscal 2001 while county revenues will increase by a corresponding amount. Because this is enabling legislation only, local government expenditures associated with collecting recordation taxes will increase only to the extent they exercise the authority to collect the tax.
Transfers Between Relatives
House Bill 274 (passed) expands the recordation and transfer tax exemption for transfers between relatives of the immediate family to include stepchildren, stepparents, stepchildren-in-law, stepparents-in-law, and stepgrandchildren.
Transfers From Class I Railroad Carriers
Senate Bill 432/House Bill 515 (both passed) exempt real property being transferred from a railroad designated by the United States Surface Transportation Board as a Class I Railroad Carrier to its wholly owned limited liability company from the State transfer tax and recordation tax. The bill is effective June 1, 1999, and sunsets December 31, 2000.
Charles County - Property Tax and Recordation Tax
Senate Bill 324 (passed) authorizes Charles County to grant a property tax credit and an exemption from the recordation tax for residential real property that is located in a designated targeted area and has been converted from a rental dwelling to an owner-occupied dwelling. The governing body of Charles County is authorized to determine the criteria, eligibility, and amount of the tax credits and exemptions.
Charles County - Recordation Tax Credit - Targeted Businesses
House Bill 396 (passed) authorizes Charles County, by law, to grant a partial or full credit on the recordation tax paid by a targeted business that is relocating, expanding, or undertaking new construction in the county. The law granting this tax credit must specify: (1) the eligibility criteria; (2) any conditions or restrictions on granting the credit; and (3) the method for calculating the credit.
Dorchester County Hotel Rental Taxes
House Bill 153 (passed) increases the hotel rental tax rate in Dorchester County from 4% to 5% and provides that a municipality receives 80% of the revenues attributable to a hotel located in the municipality. The remainder of the revenues will be distributed to the county's general fund. Under current law, municipalities in Dorchester County receive no distribution of hotel tax revenues. There are three municipalities which may receive distribution as a result of the bill: Brooksview, Cambridge, and Church Creek.
ADMISSIONS AND AMUSEMENT TAX
Political Fundraising Events
House Bill 536 (passed) excludes admission charges to political fund-raising events from the admissions and amusement tax.