Montgomery County Executive Isiah Leggett announced Wednesday that he has trimmed the residential property tax increase he proposed last month, citing new state legislation that eases fiscal fallout from last year’s Supreme Court ruling that Maryland’s income tax system was unconstitutional.
It was Leggett’s second consequential economic message this week. On Tuesday, he said he supported a $15-an-hour minimum wage for the county, provided it is phased in over at least six years and that increases can be delayed if economic conditions deteriorate.
Leggett (D) told the County Council on Wednesday that he reduced the property tax increase included in the 2017 budget he submitted last month from 8.7 percent to 6.4 percent. It drops the property tax rate increase from 3.9 cents per $100 assessed valuation to 2.1 cents.
With rising assessments, it means that the average annual residential tax bill would rise just under $242 a year, from $3,749.50 to $3,991.42 — instead of $4,075.
Leggett said he was able to lower his proposed increase after learning that Maryland Gov. Larry Hogan (R) will not veto legislation extending the period during which the county would receive reduced revenue distributions from the state because of the Wynne case.
The Supreme Court ruled 5 to 4 last year that Maryland was illegally denying residents a full credit for taxes paid on income earned outside the state. The court said the provision of the state’s tax law constituted double taxation and ordered refunds to those who had filed claims.
The county is still looking at more than $200 million in reduced tax revenue as a result of the court-mandated refunds. But under the new law, the reductions will start in May 2019 instead of this June and will be spread out across 20 quarters rather than nine.
The legislation, sponsored by state Sens. Richard S. Madaleno (D-Montgomery) and Cheryl C. Kagan (D-Montgomery), means that the county will face a $17 million reduction instead of $50 million for the fiscal year beginning July 1.
The proposed slice in the tax increase doesn’t change the major elements of Leggett’s 2017 budget. Most of the increase would still be devoted to the 156,000-student public school system, which is facing explosive enrollment growth.
In a letter to Council President Nancy Floreen (D-At Large), Leggett urged the council “to stay within this revised recommended property tax rate and overall recommended level of expenditures.”
The council will have a series of public hearings and work sessions before taking final action on the budget in mid-May.
On Tuesday, Leggett voiced conditional support for a bill sponsored by council member Marc Elrich (D-At Large) to raise the county’s minimum wage — currently $9.55 — to $15 an hour by 2020.
Elrich said he plans to formally introduce the measure next week. D.C. Mayor Muriel E. Bowser (D) has announced that she will ask the D.C. Council for similar legislation.
Montgomery joined the District and Prince George’s County in 2013 to lift the minimum to $11.50 by no later than October 2017.
A $15-an-hour wage is the target of a national campaign organized by low-wage workers, labor and Democratic activists. New York and California lawmakers have recently approved plans to phase in the new wage over several years.
In an interview Tuesday, Leggett said he would support the Elrich bill if the phase-in period was expanded to 2022, as it is in California. He said the proposal must also have an “off-ramp” that allows the county to delay implementation of increases in a bad economy.
“I would move it back a couple of years,” Leggett said of the phase-in. “Second, if you run into a clear recessionary downturn, you should have a provision to hold it [wage increases] for a period of time.”