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March 26, 2009

Baltimore County and other local governments take a hit

Those muted gasps you hear are local government officials grappling with the hits they are taking as lawmakers craft a state budget in Annapolis.

They’re muted because as bad as the cuts are, locals realized they could have been worse, if Assembly leaders followed through on ideas such as requiring counties and Baltimore to pay much more of the cost of teacher pensions – a tab that for now is carried by the state.

The Associated Press has released a list of how two cuts – in the county share of piggyback income tax, and in local transportation funds – hits each municipality.

Worth noting is that Baltimore County gets hammered particularly hard; their representatives were telling us this week that when all cuts are added together, no other county was hit harder.

Budget legislation in the House of Delegates makes significant cuts in local aid. Here is a county-by-county breakdown of how the larger cuts affect counties and Baltimore.

The $60 million cut to the local share of the piggyback tax:
Allegany — $319,000
Anne Arundel — $9 million
Baltimore city — $3 million
Baltimore — $8.9 million
Calvert — $1.2 million
Caroline — $304,000
Carroll — $1.6 million
Cecil — $1 million
Charles — $1.6 million
Dorchester — $320,000
Frederick — $2.6 million
Garrett — $350,000
Harford — $2.2 million
Howard — $3.2 million
Kent — $239,000
Montgomery — $12 million
Prince George's — $5.6 million
Queen Anne's — $682,000
St. Mary's — $947,000
Somerset — $108,000
Talbot — $968,000
Washington — $1.3 million
Wicomico — $569,000
Worcester — $1.9 million

The $102 million cut to local transportation money:
Allegany — $1.8 million
Anne Arundel — $7.9 million
Baltimore city — $19.8 million
Baltimore — $10.7 million
Calvert — $1.7 million
Caroline — $1.2 million
Carroll — $3.6 million
Cecil — $2 million
Charles — $2.6 million
Dorchester — $1.4 million
Frederick — $4.7 million
Garrett — $1.6 million
Harford — $4.1 million
Howard — $4 million
Kent — $714,000
Montgomery — $11.2 million
Prince George's — $9.8 million
Queen Anne's — $1.4 million
St. Mary's — $2 million
Somerset — $849,000
Talbot — $1.2 million
Washington — $3 million
Wicomico — $2.4 million
Worcester — $1.7 million

Posted by David Nitkin at 10:40 AM | | Comments (4)


Could you explain the piggyback tax David?
I thought this was only collected by counties/cities on their own.
his is another Maryland state tax?
David responds:

Jay -- You are correct. In Maryland, counties and Baltimore City are allowed to set a tax rate that is a proportion of the state income tax, and charge and collect that. (It typically ranges from 45 to 55 percent, based on the jurisdiction). But the entity doing the math and doing the collection is the comptroller. It's the comptroller's office that distributes the "piggyback" money to the counties. So what the Assembly is saying is, we, the state, will be keeping some of that money rather than passing it on to the counties. The state is going to keep a bit more from wealthier jurisdictions than less wealthy ones, and is going to keep more from counties closer to their maximum allowed collection rate (in effect punishing counties that haven't raised taxes as much). Let me know if that feels like a sufficient explanation.
-- David

That dang gone piggy back tax. Are we the only state in the union that uses it?

Not raising taxes is a good thing, right? Shouldn't a government not raise taxes unless it has to (as a last resort)? So isn't "punishing counties" for not raising taxes, in effect, punishing counties for doing a good job?

David responds:

David, I think almost everyone would agree that a low tax burden is desirable, as long as basic needs are being met.
Annapolis lawmakers often express frustration, however, that they took a political risk by raising the state sales tax and other taxes in late 2007, while some county governments were cutting taxes. Much state money flows back to counties, and, to be sure, politicians are sensitive to being portrayed as unfriendly to taxpayers. State legislators want their county counterparts to take the same political hits they took; at least, that's the argument in some quarters of Annapolis.

There really isn't a piggyback tax anymore. About ten years the tax was decoupled from the state tax.
It used to be that a county tax was say 50% of the state tax. Now a county tax is a flat rate of usually 3%. The county flat tax is based on the same taxable income figure used by the state.

This decoupling is important because during the special session the State did two things. First they enancted millionaire brackets or higher marginal rates. Second they increased the amounts for personal exemptions. The former only benefited the State. In the old days of a piggyback tax, the counties would have gained revenue from these new brackets, but under the flat tax the counties didn't see any new revenue. The increase in exemption amounts, however, did impact the counties as the new exemptions lowered taxable income.


Excellent points, Robert, and very good information. Thanks for commenting.

-- David

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About the bloggers
Annie Linskey covers state politics and government for The Baltimore Sun. Previously, as a City Hall reporter, she wrote about the corruption trial of Mayor Sheila Dixon and kept a close eye on city spending. Originally from Connecticut, Annie has also lived in Phnom Penh, Cambodia, where she reported on war crimes tribunals and landmines. She lives in Canton.

John Fritze has covered politics and government at the local, state and federal levels for more than a decade and is now The Baltimore Sun’s Washington correspondent. He previously wrote about Congress for USA TODAY, where he led coverage of the health care overhaul debate and the 2010 election. A native of Albany, N.Y., he currently lives in Montgomery County.

Julie Scharper covers City Hall and Baltimore politics. A native of Baltimore County, she graduated from The Johns Hopkins University in 2001 and spent two years teaching in Honduras before joining The Baltimore Sun. She has followed the Amish community of Nickel Mines, Pa., in the year after a schoolhouse massacre, reported on courts and crime in Anne Arundel County, and chronicled the unique personalities and places of Baltimore City and its surrounding counties.
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