Harford County Bill 17-021, which gives property tax credits to retired veterans 65 and older and senior citizens who have lived in the same house for at least 40 years, was approved by the County Council in a 5-1 vote Tuesday night.
Councilman Mike Perrone cast the lone negative vote; Councilman Joe Woods was absent.
Perrone stressed that every tax credit, whether for good or bad, “is a subsidy.”
“Whenever we say we’re going to give a credit to someone, we have to remember that someone else is paying for that credit,” he said.
The bill, which grants a 20 percent credit over five years to those eligible, is in line with state legislation that took effect in June 2016. The Harford credit will take effect July 1, 2018.
Local bills must grant the credit to retired military and 40-year residents, in accordance with state law, although the amount of the credit and the time it’s in effect are flexible, County Attorney Melissa Lambert advised the council during a Nov. 21 public hearing.
County Executive Barry Glassman and Councilman James McMahan, whose colleagues re-elected as council vice president Tuesday, were the lead sponsors of the bill.
County administration officials estimate the credit will cost $1.9 million in lost revenue, and they plan to make that up by eliminating a 1 percent to .5 percent discount for people who pay property taxes early. That policy takes effect July 1, 2019.
The inflexibility on who can benefit and the elimination of the discount, were two major sticking points for Perrone. He said he would “probably vote yes” if the credits just applied to retired veterans to “ease the burden for those who have served our country.”
But he also called eliminating the discount “a tax increase one everyone who has in the past opted to pay their tax bills early.”
Perrone, a certified public accountant, said there are other tax credits available, such the state’s Homeowners' Property Tax Credit Program that allows homeowners to cap their property taxes based on income, and credits for disabled veterans.
He faulted the Maryland General Assembly for putting retired veterans and long-term homeowners under the same credit, since each group’s circumstances are so different.
Perrone said the credit for homeowners hurts renters and lower-income people more frequently than wealthier people.
“This provision essentially sets up a regressive tax structure where the poor stand to pay more to subsidize those who are wealthier,” he said. “That’s just bad policy.”
Perrone also took a shot at the five-year limit on the credits, fearing future County Councils could be accused of raising taxes on seniors and veterans if the credits do not continue.
He said making temporary changes to the tax structure, with no guarantee they will become permanent “adds to uncertainty, makes it harder to plan and invest and sets the stage for unnecessary political battles down the road.”
McMahan said Perrone made “some very good points,” but he disagreed on others.
He said the money he set aside when planning for retirement and tax bills “is slowly but surely being eaten away, and I’m very glad to see some kind of a tax relief for veterans.”
McMahan, who grew up in Bel Air, is an Army veteran. He stressed Bill 17-021 is “a start.”
“The county executive used every part of the state’s bill, to its fullest, to give breaks at every level to our veterans and our seniors,” he said.
McMahan said the County Council is “powerless” to alter the terms of the state bill, but he hopes that he has the chance “in the very near future to do something about this.” McMahan has filed to run for state delegate next year.
He expressed his support for credits for long-term residents, noting “people who have lived in one county a long time and have provided service in so many different ways deserve a chance to age in place.”
“It’s far from a perfect bill, but I think it is a start and I have to, in that regard, support it,” he said.
McMahan also suggested the state’s tax credit for disabled veterans should be “tweaked,” so more people can get covered. He expressed concern about what would happen to the spouse of a disabled veteran when that veteran dies. He also suggested a credit for public safety personnel.
“More veterans in the legislature need to be proactive on this with the governor,” he said.