Commissioners oppose state tax breaks for military, first responders, elderly

The Carroll County Board of Commissioners is unified in opposition to several proposed tax cuts in the General Assembly that would affect the retirement incomes of military personnel, first responders, the elderly, the disabled and property taxes for small business.

Commissioner Richard Rothschild, R-District 4, said there are three reasons why the board is against the bills.


Concerning the bills that would only affect the military and law enforcement, the commissioners oppose any tax cut that favors government employees over the private sector, Rothschild said.

The commissioners also believe the cuts should be introduced incrementally to lessen the impact they would have on Carroll's revenue stream.


Additionally, because the commissioners have the task of providing adequate public services to their constituents, any action relating to tax cuts or raises should be at the discretion of the commissioners, not politicians in Annapolis, Rothschild said.

Commissioner Doug Howard, R-District 5, said the Maryland Association of Counties, a nonprofit organization comprised of elected officials from all 23 counties and Baltimore City, also opposes the cuts.

If these bills are passed, it could force local jurisdictions to raise taxes on their citizens, Howard said.

"What happens is, if they cut certain taxes, then we have to make ends meet," he said. "Citizens as a whole wouldn't necessarily benefit from these tax cuts."

Against unfair treatment

House Bill 177, which has been cross-filed in the Senate as Senate Bill 31, seeks to increase the amount subtracted from a person's adjusted gross income due to military pensions from $5,000 to $10,000 for state income tax purposes, and would apply to 2015 and continue going forward.

A separate bill would allow retired military personnel to subtract an even greater portion of their pensions for state tax purposes, eventually becoming entirely exempt in 2018.

Rothschild said on average, government employees have far better health care coverage and retirement packages than private sector employees.

To give them an additional benefit would be unfair to nongovernment employees, he said.

"Tax cuts should treat all people equally and not give preferential treatment to government employees," Rothschild said.

Commissioner Dennis Frazier, R-District 3, agreed with Rothschild, and said if there is going to be proposed tax cuts on pensions, then everyone with a pension should benefit.

Two separate bills have been introduced in the House that would do just that and would increase the subtraction modification of all retirement incomes for those over the age of 65 or who are disabled. However, the commissioners oppose these as well.


Commissioner Richard Weaver, R-District 2, said though these bills would benefit him, if he supported them — and they were passed by legislators — the county could lose millions of dollars in yearly revenue.

"It's a no-win situation for the county," Weaver said. "I can't strongly oppose these cuts since I would be affected. Yet if we lose this funding, the county would have to make it up somehow. No matter what [the commissioners] do we lose here."

An incremental approach

The commissioners opposed the bills after being informed they would take affect in the same year, if passed, said Commissioner Stephen Wantz, R-District 1.

If the committees responsible for vetting the bills were to alter the language to ensure they would go into affect incrementally, the commissioners might choose to support some of them, Wantz said.

"If they were implemented incrementally, I would probably change my stance on these," he said. "But the way they are worded, they will have a critical impact on funding in Carroll."

If this step is not taken, the county could not afford what the commissioners expect would be more than $20 million a year in revenue loss, Wantz said.

"Due to the fact we are ready to move into a critical time here with our budget talks, to randomly accept the bills that would cut our income, it would be ludicrous to accept them because we have some critical needs," he said.

Frazier said the estimated yearly revenue loss is not a figure the county can absorb at this time without significantly reducing funding to other areas, thus decreasing the level of services the county provides to its constituents.

"It's a lot of money, and if it was over a five- or 10-year period, we might be able to make that up possibly, somehow or another," Frazier said. "Right now, I just don't see us making that money up."

Weaver said if the legislature changed these proposed bills to be introduced incrementally, the county could plan to account for this decrease in funding. He agreed with Frazier, saying the loss of these funds would have a detrimental impact on not just county services but also public safety.

"We are not opposed to tax cuts, just don't pull all the money out at once," Weaver said. "You can't spring this on us in two months and expect us to keep the budget going."

Local control of taxes

Rothschild said the commissioners should bear the full responsibility of either raising or lowering taxes, not the state.

Elected local officials have the task of providing services to their constituents, so any decision that could affect the level of service — either positively or negatively — should be in the hands of these officials, he said.

"The state should recognize our autonomy in raising or lowering taxes," Rothschild said. "It's a matter of principal."

Howard said the debate concerning who should make the decisions relating to lowering or raising taxes comes down to one simple point: The consequences of these cuts are at the county level, so the decision should be at the county level.

"Even if these things should be done, we should be the ones making the decisions," Howard said.

Legislators weigh in

Del. Susan Krebs, R-District 5, said because state law affects counties, it is impossible to eliminate the fiscal impact state tax cuts can have on local jurisdictions. This is why it is important to have cooperation between Carroll County and its representatives in the General Assembly, she said.

"I share their concerns," Krebs said. "We need to find a way to smooth out the impact on the counties."

She said the most efficient way of doing this would be to have the bills go into effect incrementally, and legislators will need to take the bills under review to determine how best to do this.

Gov. Larry Hogan is cognizant of the fiscal impact these bills would have if signed into law, and has made efforts in his proposed budget to account for some of the loss to counties, Krebs said.

HB 480, which has been cross-filed in the Senate as SB 590, seeks to exempt property owners of small businesses from paying property taxes if its assessed value is $10,000 or less. Hogan has included in the budget money to be paid to jurisdictions to offset these losses, Krebs said.

Del. Haven Shoemaker, R-District 5, said as a former county commissioner he understands the perspective that legislation affecting county revenue should be a county driven process.


However, just as the commissioners are looking at these tax cuts not as benefactors but as those responsible for the well being of the county, Hogan and state legislators are looking at how these bills would affect the state as a whole, Shoemaker said.


In the last five years, the state has estimated that somewhere between 30,000 to 40,000 residents have moved out of state to avoid pension taxation, he said.

"We need to do something radical to change that," Shoemaker said. "The governor is thinking if we reduce taxes, people will not only stay here, but businesses and people may move here and revenue will go up, including what is received by the county."

Sen. Justin Ready, R-District 5, said it is imperative to lessen the tax burden on Maryland residents. Due to opposition to tax cuts in the General Assembly, it is unlikely that all — even most — of the bills will pass, he said. For those that do, Ready said he and the other Carroll legislators will need to have a clear vision of how they will affect the county.

"Many of these may have some affect on the county, and we need to be conscious of that working with our commissioners, but we need to make progress in lowering taxes," he said. "It's a balance how you implement tax reform, but I strongly support tax cuts."

Ready also said the goal of the Hogan administration is to increase the state's revenue. The proposed tax cuts will ideally draw more businesses and taxpayers to the state, he said.

"We are starting this year with the military, and police and firefighters, but Gov. Hogan's goal is to incrementally and dramatically reduce the tax burden on retirement income for everybody so we can keep more of our citizens in Maryland," Ready said.

Reach staff writer Wiley Hayes at 410-857-3315 or wiley.hayes@carrollcountytimes.com.

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