Officials from Montgomery County and local municipalities impacted by an apparent tax-accounting error by the state will urge the comptroller’s office to put forth a repayment plan in a meeting Friday.
Joseph Beach, director of Montgomery County’s Department of Finance, told the County Council’s Government Operations and Fiscal Policy Committee Thursday that he hopes to get detailed answers about how the mistake happened, if the error dates back to before 2010 and what steps will be taken next to pay back funds mistakenly sent to municipalities such as the Town of Chevy Chase and City of Rockville.
As reported in December by The Washington Post, the office of Maryland Comptroller Peter Franchot acknowledged that it shortchanged the county millions of dollars in local income tax revenue after mistakenly sending the money to municipalities in the county instead.
Beach on Thursday again estimated the county may have been shortchanged by as much as $15 million since 2010. The comptroller’s office has hired an outside auditor to examine the problem and hasn’t specified how much money may have been mistakenly given to municipalities instead of the county.
Council member Nancy Navarro, chairwoman of the Government Operations and Fiscal Policy Committee, said she was disappointed the comptroller’s office declined to participate in Thursday’s hearing in Rockville despite multiple invitations.
“Obviously, this raises major red flags, especially if it’s determined this goes back quite a few years,” said Navarro, who also characterized the approximately $2 million to $3.5 million a year lost because of the mistake as a significant amount despite the county’s $1.3 billion to $1.5 billion in annual income tax revenues.
The error reportedly happened because the comptroller’s office miscoded households located outside of municipalities as inside municipalities, meaning those municipalities received extra money in their income tax payments from the state.
The Washington Post reported that Town of Chevy Chase officials first found the mistake after doing an extensive audit of their own budget. A spokesperson for the comptroller’s office said the mistake was found through a routine reconciliation of accounts.
The meeting Friday will be with Andrew Schaufele, director of the comptroller office’s Bureau of Revenue Estimates, and Wayne Green, director of Revenue Administration.
In a Dec. 12 letter, Green told Beach the comptroller’s office decided to expand its review of the issue to the rest of the state and that the comptroller’s office hopes to finish the review as soon as possible, “recognizing the significance of accurate allocations to county and municipal budget processes.”
Beach told the council committee it’s also possible the comptroller’s office miscoded homes in some municipalities as located in other municipalities, especially in Chevy Chase where a handful of small municipalities border each other.
District 18 State Sen. Rich Madaleno has scheduled a Jan. 26 Budget and Taxation Committee hearing in Annapolis on the issue.
The issue comes as local and state officials continue to tangle with Franchot or his office on a number of fronts.
In December, Franchot chief of staff Len Foxwell used his personal Facebook page to criticize Gino Renne, president of the Montgomery County government employees union. Franchot and county elected officials are on opposite sides of the debate over whether to open up the county’s Department of Liquor Control to competition from private alcohol distributors. Renne’s union represents workers in the Department of Liquor Control.
Also in December, State Senate President Mike Miller sharply criticized Franchot for the income tax mistake and his stance on other issues.
Navarro said she expects to hold future council committee hearings on the mistake after Friday’s meeting.
