With little discussion, the Montgomery County Council unanimously voted Tuesday to override County Executive Marc Elrich’s latest veto, marking the sixth time he has unsuccessfully attempted to overturn legislation.
Elrich (D) attempted to veto a council decision made in February to change when the county collects development impact taxes. Currently, an applicant for a building permit does not pay impact taxes until six or 12 months after the building permit is issued, depending on the type of building, or the structure’s final inspection by the Department of Permitting Services, whichever is earlier. The council voted to change county law so that applicants do not have to pay the tax until their building project is completed.
Under the council’s Rules of Procedure, a supermajority of at least seven of the 11 councilmembers must vote in favor of overriding a county executive’s veto.
Changing the collection date means payments won’t be due earlier in the construction process as previously required. Developers, who supported the change, said the previous requirement to pay the taxes earlier sometimes affected the availability of funding to complete a project.
“If we want to reduce the cost of housing, we need to reduce the cost to build housing. That’s what this legislation does,” councilmember Evan Glass (D-At-large) said prior to Tuesday’s vote. “It reduces the cost to build housing without reducing the total amount of impact taxes collected for schools, roads and infrastructure.”
The assessment of development impact taxes is directly related to the size and geographical designations in the county’s Growth and Infrastructure Policies. Developers are required to pay the taxes on approved projects to help fund school and transportation infrastructure. The designations and rates differ based on the location of a proposed development, as illustrated in maps attached to the council’s resolution.
Development impact taxes directed to school infrastructure spending are calculated for new housing developments based on estimated school construction costs as well as the expectation that the new housing will bring new students. The taxes are used to help offset the costs associated with increasing school capacity.
Developers and local commerce officials voiced strong support for the legislation, saying it will ease the taxing process for developers and make development less burdensome, as well as positively impact the county’s economy by encouraging development.
Critics, including Elrich, have said the change will result in decreased revenue that could be used to fund the county’s Capital Improvement Program.
In a memorandum to the council, Elrich said he worried that “recent reductions to impact tax estimates” will “substantially hamper our ability to make critical community investments in school capacity projects and transportation improvements.”
“While impact taxes may not be the ideal tool for funding transportation and school infrastructure, further reductions to impact tax revenues should not be enacted before assembling the study group recommended by the Planning Board and the County Council to identify alternative revenue streams,” Elrich wrote.
In December, the council overrode a veto from Elrich of another piece of development impact tax legislation. That legislation updated the county’s development impact tax districts. As of Jan. 1, some developments are no longer subject to development impact taxes, based on their location or the type of project, or may pay a lower rate than in the past.
Prior to that, the most recent veto override was in March 2023, after Elrich rejected the council’s confirmation of Planning Board appointee James Hedrick due to concerns over his social media posts, which had included critiques of Elrich’s policies. The council unanimously voted to override Elrich’s rejection and Hedrick is serving on the Planning Board.
