Harford's taxing policies [Editorial]

The Aegis

Earlier this year, Harford County Councilman Mike Perrone caused a stir when he suggested that the county defund the agricultural preservation program and consider using the money for more pressing, contemporary needs, such as hiring police officers to be on duty at elementary schools.

Saying you want to tamper with the funding for a sacrosanct program is akin to being a political Don Quixote, but Perrone shone a spotlight on a program not accustomed to the glare of public scrutiny, regardless of its efficacy.

According to the audit for the 2017 fiscal year, the county collected almost $13.8 million in real estate transfer taxes, revenue which by law is divided evenly between paying off school construction debt (or funding new projects) and paying owners of farmland not to develop it.

This is what county voters approved a quarter century ago. Perrone’s reasoning was simple: What was important 25 years ago, might not be as important as something else that money is needed for today. Sound reasoning, perhaps, but politically unpalatable given the power the farm lobby still exercises in Harford County.

Still, Perrone’s questioning ag preservation got us thinking about another of these local specially funded programs for special interests – tourism promotion and development.

After two decades of the local politicians (often swayed by powerful private interests) bickering back and forth, Harford County in 2015 became the last of Maryland’s 24 principal subdivisions to impose a tax on hotel rentals.

This “lodging fee,” so called because some politicians think “fee” sounds better to the public than “tax” was set at 6 percent. Legislation approved by the County Council in January 2015, earmarked the tax revenue for tourism initiatives, essentially leaving it up to the county executive how to parcel out the money. Not all the tax revenue flows directly to the county, as the three municipalities get 50 percent of any of the taxes collected within their borders, which in this case means only Aberdeen and Havre de Grace because Bel Air does not have any hotels or motels. (The rise of Airbnb might give the county and its three municipalities incentive to reassess how the tax is being collected.)

On the night the hotel tax legislation was set to pass, Councilman Chad Shrodes offered an amendment to divert 25 percent of the new tax revenue to the county general fund, for no specific use, although he mentioned using the money to fix deteriorating county roads or giving raises to county employees who hadn’t gotten any in awhile. Perrone supported the amendment, but the other five councilmen wouldn’t hear of it, easily voting it down and passing the tax legislation as introduced by the county executive.

In the intervening four county budgets, County Executive Barry Glassman has been annually providing grants to non-profit organizations whose activities presumably foster visitors to Harford County. The visitors presumably in turn spend money to help the local economy.

The money is doled out yearly through a competitive review process. A committee reviews applications and recommends to Glassman which organizations are worthy of being funded. Each has to submit a detailed financial statement about how the money was used before they can apply again. Ultimately, though, it’s Glassman’s call who gets the money.

The 27 grants for the 2019 fiscal year were announced recently and published in Friday’s edition of The Aegis. They total $960,000 and range from a low of $4,000 to the Harford Artists Association in Bel Air to $80,000 to the Havre de Grace Decoy Museum. The average grant is $35,000.

A 28th grant went to the county’s quasi-public tourism agency, Visit Harford!, which will receive $595,000 for “operations and outreach,” an amount consistent with prior years.

A couple of points to consider: According to the county audit, the county’s share of the room tax in both fiscal 2017 and 2016 was $2.3 to $2.4 million, meaning about $800,000 isn’t being doled out each year. Collections for 2019 are expected to be in the same range. The defeated Shrodes amendment of 2015 would have held back about $700,000 annually for the general fund.

The room tax revenue doesn’t appear to be growing from year to year, which raises the question: If we are using the money to theoretically bring more visitors to the county, why aren’t they staying overnight more often?

Finally, with all the teeth-gnashing over the Perrone proposal to defend agricultural preservation and use the money for something else, Harford County does have a recent history of revamping dedicated revenue sources.

That’s exactly what happened when the current administration decided to take the portion of the recordation tax imposed in the early 1980s to bail out the county’s debt ridden public sewer system and instead use the revenue for stormwater remediation obligations. The initial use of the tax had served its purpose, it was argued, convincingly we might add, and by making the change, a controversial but albeit brief stormwater or “rain tax,” was repealed.

In Harford County, as we have said many times, real property and income tax relief hardly ever receives serious consideration, while finding other ways to nickel and dime the citizens with a tax here or a fee there has been and continues to be SOP. While the use of the money may be worthwhile, it’s still coming out of most of our pockets, a point that shouldn’t be overlooked.

avought@theaegis.com

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