With municipal officials demanding that Montgomery County reimburse them for services they provide to residents within their borders, the County Council is supporting a new payment plan.
In mid-April, representatives from several local municipalities pressed County Council members to include about $14.2 million in the upcoming budget. That is the amount the municipalities estimated the county owes them for tax duplication.
Tax duplication is the issue of property owners paying taxes to both the municipal and county governments for a service they receive only from the municipality. Tax duplication is resolved with a rebate payment to municipalities.
But the municipal officials’ request was around $5 million more than County Executive Marc Elrich accounted for in his budget proposal for the next fiscal year. Elrich had figured on a little less than $9 million.
Municipal leaders said the county had agreed to reimburse the full amount of their request. But county officials said there was a misunderstanding and that the agreement was to phase in part of the funding over the next two years.
The County Council is now supporting a new plan, spearheaded by Council Member Nancy Navarro, that will place the missing $5 million in three separate payments on the budget’s Category 2 list during fiscal year 2022.
Elrich’s proposed appropriation would be approved with the expectation that an additional $5 million would potentially come in three separate appropriations — $2 million, $1.5 million and $1.5 million — throughout the year.
The budget’s Category 2 list is used for expenditures that the council would like to make but doesn’t have the revenue for yet. The council plans to revisit the list in the summer.
Navarro’s tax duplication proposal was unanimously supported by the council through a straw vote on Wednesday. The final vote will come later during the budget process.
As part of the council’s plan, Elrich would work with municipalities to reach an agreement on formulas for future property tax duplication reimbursements, as well as for reimbursements related to municipal police services.
Negotiations would be finished by August, with the formulas finalized before the fiscal year 2023 budget is formed.
The county froze the rebate at a certain level during the Great Recession because of a lack of revenue, but costs for road maintenance, crossing guards, parks and police have increased.
Navarro said during Wednesday’s council meeting that the new plan would hopefully resolve the longstanding issue.
“We feel that this would be able to solve all those outstanding issues [and] that for next year’s budget, we will have the types of formulas and type of resolution that is agreed upon by all parties,” she said.
Council Member Sidney Katz, the council’s leader on the property tax duplication issue, said the problem has been dragging on for years.
“I do believe that this is not just about tax duplication. This is actually paying the municipalities for the work that they are doing, that if they were not in existence, the county would be doing. … This is really getting us to where we should be,” he said.
Council Member Hans Riemer said the part of the resolution that stipulates negotiations between Elrich and municipalities is key to finding a way forward.
“We’ve got to have something that is on paper and everybody showing their math,” he said.
Briana Adhikusuma can be reached at email@example.com.