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  • Writer's pictureCLPA Policy Staff

Examining Expedited Bill 25-23: Exploring Potential Impact Tax Reforms in Montgomery County

The Montgomery County Council is currently examining Expedited Bill 25-23, which, if enacted, would change how taxes are calculated for transportation and public school improvements. The bill suggests modifications to the tax rate adjustments and introduces a cap on the tax rates.

Currently, tax rates are modified every two years based on changes in construction costs and school construction expenses. However, Expedited Bill 25-23 proposes a different strategy for calculating transportation-related taxes. Instead of considering the average cost increase annually, they would consider the total cost change over the past two years. This would ensure that taxes accurately reflect construction cost inflation.

The bill also suggests restricting how much taxes can increase. If construction costs increase by more than 20%, the tax rate adjustments for transportation and public school impact taxes would be capped at 20%. Any additional amount would be saved for future adjustments. The bill is accompanied by a resolution that approves the proposed tax rates, incorporating the 20% cap.

During the public hearing on June 13, various stakeholders expressed their opinions on the bill. The Montgomery County Planning Board backed the bill but suggested changes to the carryover provision for transportation impact taxes. The Montgomery County Council of PTAs (MCCPTA) also supported the bill but suggested a 25% cap and urged the Council to consider a long-term solution through the new Growth and Infrastructure Policy. The Maryland Building Industry Association (MBIA) supported the bill but recommended lowering the cap to 12%-14%.

The Government Operations & Fiscal Policy Committee reviewed the bill on June 15 and approved several amendments. They agreed to modify the carryover calculation for transportation and public school impact taxes, using a specific dollar amount instead of a percentage. The committee also better defined the calculation method for school impact taxes, emphasizing the use of the average Montgomery County public school construction costs.

If Expedited Bill 25-23 is enacted, it is expected to result in a net loss of roughly $24.5 million in tax revenue from fiscal years 2024-2028. However, Councilmember Jawando offered amendments to reduce this loss in revenue to around $19.7 million. These amendments include setting the cap at 25% and removing the recapture provision.

CLPA will provide a vote report once this bill is brought up for a final vote.


Bill text of Expedited Bill 25-23:


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