State senator will try again to win tax-bill battle Vetoed plan would have given counties power to collect recordation taxes


If ever there were a year to allow Carroll and other Maryland counties to collect taxes when clerks enter property deeds into court records, this would have been it, said state Sen. Larry E. Haines, a Westminster Republican.

Haines, chairman of Carroll's legislative delegation, has been trying for years to help Maryland counties and Baltimore do what Prince George's County has done since 1968 -- collect their own recordation taxes when recording property deeds. The move could save the counties $5 million a year.

Gov. Parris N. Glendening vetoed Haines' bill again this year, as he had last year, despite a strong letter of support from the Maryland Association of Counties.

"I'm dismayed by your actions and I cannot understand why you continue to override the will of the General Assembly," Haines told the governor in a letter on May 22. Allowing local jurisdictions to collect their own recordation taxes "is one of the most important public policy changes needed in Maryland," Haines said.

The tax itself -- which amounts to nearly $100 million each year -- is not the issue. The state returns at least 95 percent of the tax to counties and Baltimore. But it keeps up to 5 percent as a fee for collecting the tax.

And that, Haines said, is a huge rub. The state makes a profit at the expense of the counties, he said, and he wants the practice to stop. In fiscal 1997, the state charged 22 counties and Baltimore $4.8 million to collect the tax.

Carroll, for example, paid $248,071 -- 5 percent of its recordation taxes -- to the state in fiscal 1997. Had the county collected the taxes internally, it would have saved at least $183,000, said county Comptroller Eugene C. Curfman.

"Even if we had to hire one or two people to take it over, it would not cost us more than $65,000" a year to collect the tax, Curfman said.

The state doesn't hide the fact that the fee is a coveted revenue producer. When Glendening vetoed Haines' bill May 20, he said money derived from the fees "should continue to be devoted to the priorities of education and school construction funding."

Haines found that argument specious. His bill would not take effect until 2000, giving the state plenty of time to try to find other sources of revenue, Haines said. In addition, the governor put a $350 million surplus in the $16.5 billion operating budget for fiscal 1999 that was approved in April by the General Assembly.

"There was no better time to sign this bill," Haines said.

The "rationale stated in your budget message is not factual," Haines told the governor. "This change will not force the state to reduce funding in priority areas such as school construction and education aid."

If so, Prince George's County, where Glendening was county executive for 12 years, would have suffered, Haines said. "Have you reduced educational aid to Prince George's County because they are doing what [the Haines bill] would permit the other counties to do?" he asked the governor.

The governor has not replied to his letter, Haines said.

A spokesman for the governor said yesterday that Glendening would have no comment beyond the May 20 veto message he sent to the Senate.

Prince George's County would have paid the state $704,472 in fiscal 1997 had it been charged the 5 percent fee assigned to Carroll; $422,683 if the fee were 3 percent, as in Baltimore County.

What concerns Baltimore County officials about the state's collection of county money is a possibly deleterious side effect -- the loss of other tax revenue.

Baltimore County collected about $14 million in recordation taxes, about the same amount as Prince George's, in fiscal 1997, but far less transfer tax. A comparison over several years showed the same disparity. Baltimore County officials wanted to know why.

After talking with Porter Venn, treasury chief in Prince George's County, they think they may have the answer. Attorneys may be convincing some court clerks that certain properties are exempt from transfer taxes. Transfer taxes must be paid before recordation.

Venn, who has testified in favor of the Haines bill and against what he calls the "state rake-off," thinks Baltimore County officials may be right.

"Local collectors have a lot more focus, and are much more proprietary [in making sure transfer taxes are paid] since they are collecting their own money," he said.

Property recordations are "very, very complex transactions and can get very complicated. It's been my observation that we are pretty tough on this" -- ensuring that the tax exemptions claimed are the tax exemptions allowed.

David S. Bliden, executive director of the Maryland Association of Counties, said he is encouraged that despite the veto, "the governor left the door open" for counties to begin collecting the recordation tax themselves.

"I am aware of the importance of this legislation to county governments," the governor said in his veto message. The issue "should be further studied in the context of the state's fiscal condition and local government priorities for the 1999 session," he said.

Haines is counting on it.

"I will continue to press for this measure until I see it become law," he said.

Pub Date: 6/02/98

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