Agenda Item 16
May 4,2010
Public Hearing
MEMORANDUM
TO:
FROM:
County Council
~Michael
Faden, Senior Legislative Attorney
'it
Glenn Orlin, Deputy Staff Director
Public Hearing:
Expedited Bill 14-10, Recordation Tax
Allocation of Revenue
SUBJECT:
Expedited Bill 14-10, Recordation Tax - Allocation of Revenue, sponsored by the
Council President at the request of the County Executive, was introduced on March 23, 2010. A
Management and Fiscal Policy Committee worksession is tentatively scheduled for May 6 at 2
p.m.
Recordation tax background
As Councilmembers will recall, the County recordation
tax, levied under state law and shown in County Code §52-16B, since 2008 has 3 levels or tiers:
Tier
I
2
3
Rate
$4.401$1000
$2,501$1000
$3.101$1000 (>$500,000)
Use of funds
General Fund (unrestricted)
MCPS capital, College educational technology
50% County government capital improvements
50% new funding for rental assistance programs
Summary
Bill 14-10 would suspend for the next 2 fiscal years the current requirement
that portions of the recordation tax (Tier 3) be allocated to the cost of County Government
capital projects and rental assistance programs for low and moderate income households.
On April 27, the Executive proposed a further amendment (see ©7-8) that would also
suspend, for the next 3 fiscal years, the requirement that another portion of the recordation tax
(Tier 2) be allocated to capital improvements to County schools and educational technology for
Montgomery College.
Fiscal impact
Council staff has not received a fiscal impact statement for this Bill or the
Executive's amendment.
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Options
Other options before the Council for allocation of recordation tax revenue
include:
• suspend the statutory revenue allocations in Tiers 2-3 only for the next fiscal year,
FYll;
• repeal the statutory revenue allocations in Tiers 2-3 so that all recordation tax revenue
goes to the General Fund and is available for any appropriation.
This packet contains:
Expedited Bill
14-10
Legislative Request Report
Memo from County Executive
Second memo from County Executive
Executive amendment
Circle
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F:\LAW\BILLS\1014 Recordation Tax\Public Hearing Memo.Doc
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Expedited Bill No.
14-10
Conceming: Recordation Tax­
Allocation of Revenue
Revised:
3-22-10
Draft No.
_1_
Introduced:
March
23, 2010
Expires:
September
23, 2011
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _----'"_ _
Sunset Date:
-:..:.No:.:n.:.::e,--~:--
_ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request ofthe County Executive
AN EXPEDITED ACT
to:
(1)
revise the allocation of certain revenue received from the recordation tax; and
(2)
generally amend County law related to the recordation tax.
.
By amending
Laws of Montgomery County 2009
Chapter 17
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double
boldface bracketsD
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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ExPEDITED BILL
No. 14-10
1
Sec.
I.
Chapter 17
of the
Laws
of Montgomery
County 2009 is amended
as follows:
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3
*
*
*
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Sec. 3. Allocation of Revenue.
During any fiscal year that begins on or after
July 1, [2010] 2012, the net revenue attributable to the increase in the rate of the
recordation tax enacted in this Act must be reserved for and allocated equally to:
(
a)
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the cost of County government capital improvements; and
(b) rental assistance programs for low- and moderate-income households,
which must not be used to supplant any otherwise available funds.
Sec. 2. Expedited Effective Date.
The Council declares that this legislation
IS
necessary for the immediate
12
protection of the public interest. This Act takes effect on the date when it becomes
law.
Approved:
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14
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Nancy Floreen, President, County Council
Approved:
Date
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Isiah Leggett, County Executive
This is a correct copy ofCouncil action.
Date
23
24
25
Linda M. Lauer, Clerk of the Council
Date
F:ILAWSILLS\1014 Recordation Tax\BilI1.DOC
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LEGISLATIVE REQUEST REPORT
Expedited Bill 14-10
Recordation Tax - Allocation of Revenue
DESCRIPTION:
This Bill would suspend the current requirement that portions of the
recordation tax be allocated to: (a) the cost of County Government capital
projects; and (b) rental assistance programs for low and moderate income
households.
PROBLEM:
In
order to meet current fiscal challenges facing the County, the County
must increase the amount of revenue available to maintain core
Government programs and services.
To enhance the amount of revenue available to support core government
programs and services.
GOALS AND
OBJECTIVES:
COORDINATION:
Office of Management and Budget; Department of Finance
FISCAL IMPACT:
To be requested.
ECONOMIC
IMPACT:
EVALUATION:
To be requested.
Subject to the general oversight of the County Executive and the County
Council.
EXPERIENCE
ELSEWHERE:
SOURCES OF
INFORMATION:
Joseph Beach, Director of Management and Budget
Kathleen Boucher, Assistant Chief Administrative Officer
Marc Hansen, Acting County Attorney
APPLICATION
Revenue laws apply County-wide.
WITHIN
MUNICIPALITIES:
PENALTIES:
N/A.
F:\LAW\BILLS\IOI4 Recordation Tax\LRR.DOC
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE. MARYLAND 20850
lsiah Leggett
COllnty
Executive
MEMORANDUM
March 18,2010
TO:
FROM:
SUBJECT:
Nancy Floreen, Council President
0
Isiah Leggett, County
Executive~
!J5;;;:tZ:37"-r--­
)
FY 2011 Budget Reconciliation and Financing Act
(
,
I am attaching for Council's consideration a Budget Reconciliation and Financing
Act (BRF A) which makes changes to the County Code that are necessary to reconcile my
recommended FY 2011 operating budget with projected FY 2011 revenues. This bill will help
the County address its current fiscal challenges by increasing the amount of revenue available to
maintain and enhance core government programs and services. I am also attaching a Legislative
Request RepOli for the bill. A Fiscal Impact Statement will be transmitted to Council soon.
The BRFA consists of five primary components. First, it increases the energy tax
rates. Second, it temporarily redirects the portion of recordation tax revenues that are currently
reserved for County Govemment capital projects and rental assistance programs to the general
fund for general purposes. Third, it allows revenues generated by the Water Quality Protection
Charge to be used to pay debt service on bonds that fund stormwater management infrastructure
projects. Fourth, it transfers responsibility for administering equal employment opportunity
programs from the Office of Human Resources to the Office of Human Rights. Fifth, it
authorizes the Fire and Rescue Service to impose an Emergency Medical Services (EMS)
Transport Fee.
As the Council knows, the County's energy tax is actually a tax on fuel oil,
natural gas, and electric utility providers which is passed on to all utility customers. Because the
energy tax is a broad-based tax, its impact on families is reduced by the fact that it is paid by
businesses and households, and all levels of government, including federal agencies located in
the County (that currently do not pay any other major County tax). Additionally, the energy tax
is a consumption tax based on energy usage.
It
is not based on the overall size of the utility bill
or the cost per unit of energy used as billed to the consumer. Therefore, the amount of the tax
can be lessened by reduced energy usage. Based on existing usage patterns for the average
homeowner, my recommended FY 2011 budget assumes an average increase in the energy tax of
approximately $2.90 per month. I have also recommended additional funding in the Health and
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Nancy Floreen, Council President
March 18,2010
Page 2
Human Services budget for the County's Energy Assistance Program to minimize the impact to
low-income households.
My recommended FYll budget contains several efforts to restructure County
Government to improve responsiveness and efficiency. One of these changes is the transfer of
the Equal Employment Opportunity program from the Office of Human Resources to the Office
of Human Rights. This shift takes advantage of existing staff resources to reduce costs and
leverage the efforts of County staff to produce better outcomes for the community. This bill
modifies the County code provisions relating to the responsibilities of the Office of Human
Resources and Office of Human Rights to reflect this change.
The EMS Transport Fee is needed to fund fire and rescue services in the County.
Without this fee, emergency response to residents will be impaired. EMS Transport Fees are
widely employed throughout the nation and by local governments throughoutthe Washington
region. These jurisdictions have not experienced any indication that people decline to use
emergency transports as a result of the imposition of an ambulance fee. By creating a prepaid
fund for uninsured County residents, the legislation that I am transmitting imposes a fee only on
County residents with health insurance which covers EMS Transports. This arrangement more
equitably distributes the economic burden of providing EMS transport services in the County
between residents and nonresidents. The legislation provides for a hardship waiver for
nonresidents who fall below 300 percent of federal poverty guidelines.
To provide the Council with a complete picture of the EMS Transport Fee
program created by this bill, I am attaching a copy of the proposed Executive Regulation to
implement the fee. This proposed regulation will be published in the April 2010 County Register
and submitted to Council after the 30-day public comment period ends on April 30.
Finally, I note that the BRF A is consistent with Bill 31-09, Consideration of
Bills - One Subject (enacted on September 29, 2009), which requires that a bill "contain only
one subject matter".' As noted in the Council staff packet for Bill 31-09, that bill was intended to
adopt the "one subject rule" of the Maryland Constitution, which requires all laws enacted by the
General Assembly to contain only one subject. The Maryland Attorney General has repeatedly
concluded that budget reconciliation and financing bills do not conflict with the one subject rule.
For example, in 2005, the Attorney General noted that "[fjor the past fourteen years, 15 budget
reconciliation, budget reconciliation and financing acts or variations thereof, have been used to
balance budgets, raise revenue, make fund transfers, redistribute funds, cut mandated
appropriations and authorize or mandate appropriations."] The Attorney General concluded that
all of those bills were consistent with the one subject rule because the provisions of the bills were
"clearly germane to the single subject of financing State and local government".
See Panitz v.
Comptroller ofthe Treasury,
247 Md. 501 (1967) (Omnibus supplemental appropriation bill
comprised a single subject for purposes of § 29 of
Art
III of the State Constitution even though
See May 19, 2005 memorandum from Attorney General J. Joseph Curran, Jr. to Governor Robert Ehrlich regarding
House Bill 147 (2005).
I
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Nancy Floreen, Council President
March 18,2010
Page 3
the bill combined such diverse elements as police aid to local government; teacher salaries and
pensions; and general unrestricted grants to local government).
Attachments (3)
cc:
Joseph Adler, Director, Office of Human Resources
Jennifer Barrett, Director, Finance Department
Joseph Beach, Director, OMB
Kathleen Boucher, ACAO
Richard Bowers, Fire Chief, MCFRS
Marc Hansen, Acting County Attomey
Robert Hoyt, Director, DEP
Richard
Y.
Nelson, Jr., Director, DHCA
James Stowe, Director, Office of Human Rights
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OFFICE OF THE COUNTY EXECUTIVE
Isiah Leggett
County Executive
ROCKVILLE, MARYLAND 20850
MEMORANDUM
April 27, 2010
TO:
Nancy Floreen, President
Montgomery County Council
FROM:
.2
Isiah Leggett, County Executive
-P
~
')
SUBJECT:
Proposed Amendment to Bill 14-10, Recordation Tax-Allocation ofRevenue
The County has experienced a steep decline in projected revenues from the income
tax. This decline combinedwiththe need to restore the County's reserVe levels to the 6% policy
level has opened a FY-11 budget gap of approximately $200 million. A major part of my
recommended strategy for closing this budget gap is to reduce current revenue funding of capital
projects.
In
order to implement this strategy I am reluctantly recommending that Bill 14-10,
Recordation Tax-Allocation ofRevenue, be amended to suspend for two years the current
requirement that a portion of the recordation tax
be
allocated to the cost of capital improvements
to schools and educational technology for Montgomery College. A draft amendment to Bill 14­
lOis attached to this memorandum.
IL:tjs
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EXPEDITED BILL
No.
[CLICK - TYPE NUMBER]
1
2
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Proposed Amendment to Bill 14-10
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Sec. 2. Chapter 9 of the Laws of Montgomery County 2002, Sec 4, as
amended
by
Chapter 21 of the Laws of Montgomery County 2003, and
further amended
by
Chapter 33 of the Laws of Montgomery County 2003, is
further amended as follows:
Sec. 4. Allocation of Revenue
During any fiscal year that begins on or after July 1, 2004, the net revenue
attributable to the increase in the rate of the recordation tax enacted in this Act must
be reserved for and allocated to the cost of capital improvements to schools and
educational technology for Montgomery College in the form of debt service for debt-
eligible projects and current revenue for debt-eligible or non-debt-eligible projects.
This allocation ends as of the effective date of this Act and begins again during any
fiscal year that begins on or after July 1. 2013.
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Bill - amend allocation of revenue.doc