Prince George's and Montgomery counties' aid fight may affect Maryland budget

By Aaron C. Davis and Jonathan Mummolo
Washington Post Staff Writer
Thursday, February 18, 2010

A funding dispute between representatives of Prince George's and Montgomery counties is on a collision course with state budget negotiations and could splinter support for Gov. Martin O'Malley's proposed $32.1 billion spending plan, some lawmakers warn.

The ill will -- mostly emanating from Prince George's -- has long simmered in Annapolis. But with the recession wiping out the state's ability this year to use extra money to smooth over the problem, several Prince George's lawmakers say they can no longer turn the other cheek and watch their county lose money to a richer neighbor.

"They make out a great deal better," Prince George's Del. Gerron S. Levi (D) said of Montgomery. "I think our delegation is pretty well committed to seeing things change this year for the better for our county. I would expect a rigorous, tough debate."

In the view of many Prince George's lawmakers, an outdated formula involving residents' tax returns allows wealthier counties -- Montgomery chief among them -- to retain a larger share of funding than they deserve under state statutes designed to distribute money from rich counties to poor ones. For Montgomery lawmakers, the argument makes little sense, given that county residents pay more in state taxes than they receive in state aid, and that neighboring Prince George's receives far more aid overall.

At the core of the growing dispute is a set of wonky state aid formulas that were not adjusted four years ago, when a change in federal law allowed taxpayers to take extra months to file complicated returns. The change has resulted in more wealthy Marylanders filing taxes in recent years in October, after state cutoff dates used to calculate most aid for Maryland school districts and county services.

In tax year 2008, the most recent data available, 22.6 percent, or roughly $6.1 billion in returns, had not been filed in Montgomery when local aid was calculated. About 4 percent, or $482 million, in returns had not been filed in Prince George's. As a result, Prince George's appeared relatively richer than it was, meaning it qualified for less aid, said Del. Justin D. Ross (D-Prince George's).

"It's like a broken watch. It no longer tells time . . . it no longer calculates real wealth," Ross said of the formula when O'Malley (D) made a recent unscheduled appearance at a meeting of Prince George's lawmakers to try to tamp down anger over the issue.

On Wednesday, Ross upped the ante in the House of Delegates, filing the Equity in Education Funding Act of 2010, seeking to delay state aid calculations until November, after all state residents should have filed their returns.

It isn't the first time Prince George's lawmakers have attempted the change, but several said this year's effort already has gained more steam than prior attempts.

According to calculations by the state's nonpartisan Department of Legislative Services, such a move would have sent an additional $140 million or more to Prince George's over the past three years while taking more than $100 million from Montgomery.

Montgomery's side of the argument? This year it received about $695 million in total state aid to Prince George's $1.1 billion.

"I think in general it's a stretch," Del. Tom Hucker (D-Montgomery) said of the argument that Montgomery unfairly benefits from such formulas.

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