Laurel Leader

City of Laurel must repay over $360,000 after state's tax distribution error

Following a five-year error in the state's local income tax distribution, the city of Laurel is now faced with repaying more than $360,000 to the Office of the Comptroller of the state of Maryland.

In a public statement last month, Comptroller Peter Franchot said an independent audit reported a 99.9 percent accuracy rate for tax years 2010 through 2014, with discrepancies in $12.7 million out of the $14.9 billion of local income tax revenue.


Overpayment was reported in 20 counties, municipalities and special taxing districts throughout the state, according to spokesman Peter Hamm, including Prince George's, Carroll and Hartford counties.

"The agency sincerely regrets the errors, which were reported to a joint committee of the Maryland General Assembly [on Nov. 16] after being discovered through a voluntary external audit," Hamm said in an email, referring to the Joint Committee on the Management of Public Funds.


After the state received income tax paid by Laurel residents, Hamm said an incorrect percentage was then distributed to the city and other areas for its general operating budget between 2010 and 2014.

Laurel spokeswoman Audrey Barnes said the city must repay $362,351 over 10 years, beginning in 2024.

Michele Saylor, the city's director of Budget and Personnel Services, said the mayor and City Council will work together in January and February to address the repayment process when they prepare the fiscal 2018 operating budget.

"We don't have to start paying back until 2024, but until that time, it would remain a liability to the city," Saylor said. "Whether or not the mayor or council comes up with a plan to repay it sooner or faster than 10 years remains to be determined. Moving forward, now having a change in what we thought was our historical data revenues, we'll have to factor that in."

Over those five years, Saylor said the city was, presumably, paid for residents who do not actually live within city limits. While there will be no affect on residents' taxes, Saylor said she was disappointed to learn of the miscalculation.

The city must find a way to follow a repayment schedule that will have a minimal impact on city services, she said.

"It's another hurdle in an already challenging environment, thinking that we had our history on point and we utilized that as we moved forward with making projections," Saylor said. "It will be something else that we have to keep track of, record and monitor as far as the repayment. It will be more challenging to balance the budget with less revenue."

Barnes said the city will also work with the Office of the Comptroller on preventive measures in the future.