Correction at 5:10 p.m. — This article indicated that the Montgomery County Taxpayers league spurred the Council staff recommendation. That is incorrect. The Taxpayers League supported the recommendation after it was made.
Updated at 5 p.m. — The Town of Chevy Chase could be out of a $130,000 payment from Montgomery County because it doesn’t have its own property tax.
Because of reserves reaching nearly $8 million, the Town of almost 3,000 people got rid of its property tax for FY 2014. Town officials had proposed keeping the property tax rate at zero again in FY 2016, expecting a $130,297 income tax reimbursement payment from Montgomery County.
The Town of Chevy Chase, like all incorporated towns and municipalities, sometimes draws “tax duplication payments” from the county.
This year, Council staff recommended against reimbursing the Town its $130,000 because it says the zero percent property tax rate means there is no duplicate tax. The Montgomery County Taxpayers League has weighed in supporting the recommendation.
“I’m truly a lover of municipalities,” said Councilmember Sidney Katz, the former mayor of Gaithersburg. “But I have to tell you, when you talk about tax duplication, there has to be a duplicated tax.”
Katz, Hans Riemer and Government Operations Committee Chair Nancy Navarro voted to get rid of the payment to the Town in a hearing last week.
In a memo before the hearing, Town of Chevy Chase Mayor Kathy Strom wrote that the move (after County Executive Isiah Leggett’s budget included the duplication payment) “threatens to wreak havoc on the Town’s Charter-mandated budgeting process.”
It could mean the Town will have to reinstate its property tax rate, Town Manager Todd Hoffman told Montgomery Community Media.
The Town still expects to have a reserve of $7.2 million for FY 2016, some of which could be used to continue a lobbying battle against the Purple Line or for design and construction costs of a new park on two public parking lots.
Strom wrote that Jacob Sesker, the Council staff person who made the recommendation to strip the payment, is misinterpreting the county’s tax duplication law.
She pointed to a 2002 opinion from a county attorney who said the property tax wasn’t the only tax to be considered when calculating an estimated tax duplication or overlap.
The Town, which provides services such as leaf collection, trash and recycling collection and street and sidewalk maintenance, based its FY 2016 budget on an income tax revenue of about $2.9 million. Without the $130,000 payment, it would risk running a deficit of about $280,000.
Sesker, in his recommendation to get rid of the duplication payment, pointed to a working group of six people who has been working with Council staff over the past few months about tax policy changes.
One of the members, Joan Fidler of the county’s Taxpayers League, supported the idea of revoking the Town’s tax duplication payment if the Town doesn’t have its own property tax to be duplicated.
“This is a good example of why the income tax revenue the municipalities get has to count toward the overall fiscal issues,” Riemer said at the hearing on Thursday. “Otherwise, we would rebate the Town of Chevy Chase for services even though there is no duplicated tax and I can’t do that.”
