Agenda Item 6A
June 27, 2017
Action
MEMORANDUM
June 23, 2017
TO:
FROM:
SUBJECT:
County Counc:
11
Amanda Mihill, Legislative Attorney
V
,
Jn-OJl\lli
-
Action:
Expedited Bill 13-17, Taxation - Property Tax Credit for Retired Military
Services Members - Eligibility
Government Operations and Fiscal Policy Committee recommendation (3-0):
enact
Expedited Bill 13-17.
Expedited Bill 13-17, Taxation - Property Tax Credit for Retired Military Services Members -
Eligibility, sponsored by Lead Sponsor Councilmember Floreen and Co-Sponsors Council President
Berliner, and Councilmembers Rice, Katz, and Navarro, was introduced on May 2, 2017. A public
hearing was held on June 13 and a Government Operations and Fiscal Policy Committee
worksession was held on June 22.
Background
Expedited Bill 13-17 would expand the property tax credit for military retirees to include a retired
member of the uniformed services, the military reserves, or the national guard. Expedited Bill
13-17 would implement authority granted in House Bill 1234 that was enacted during the 2017
General Assembly session. Expedited Bill 13-17 would take effect on July
I.
Public Hearing and Correspondence
At the June 13 public hearing, the Council heard from Captain David Peterson on behalf of the
Montgomery County Chapter of the Military Officers Association of America supportive of Bill
13-17 (©12). The Council also received a letter from James Tully requesting adjustments in the
assessment cap for the property tax credit for elderly individuals and retired veterans (©13).
1
Council staff notes that the bill presently before the Committee was drafted with a specific purpose - to address
eligibility for retired members of the military services. It was not drafted generally as a bill to reopen the other
eligibility criteria for the broader tax credit program.
1
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Discussion
As Councilmembers will recall, earlier this year, the Council enacted Bill 42-16, which created a
property tax credit for certain elderly individuals and retirees of the armed forces. During the
deliberations for that bill, the Council had received testimony requesting the credit be available to
include retired members of the U.S. Public Health Service and National Oceanic and Atmospheric
Administration. At that time, Council staff noted that the state enabling legislation authorizing the
Council to enact the credit limited eligibility for the credit to retired members of the armed forces.
Council staff advised that until the state enabling law was changed, the Council could not expand
the credit:
During the 2017 General Assembly session, House Bill 1234 was enacted (and later became law),
which expanded the tax credit to retired members of the uniformed services (which includes the
U.S. Public Health Service and National Oceanic and Atmospheric Administration), the military
reserves, or the National Guard. Bill 13-17 expands the eligibility of the local program to
implement the authority granted in House Bill 1234. In the Fiscal Impact Statement on ©7, the
Department of Finance estimates that Bill 13-17 would result in a loss of $360,000 in tax revenues.
Committee recommendation
(3-0): enact Expedited Bill 13-17.
This packet contains:
Expedited Bill 13-17
Legislative Request Report
House Bill 1234
Fiscal Impact Statement
Testimony/Correspondence
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3
4
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Expedited Bill
No.
13-17
Concerning: Taxation - Property Tax
Credit for Retired Military Services
Members -
Eligibility
Revised:
4/21/2017
Draft No.
2
Introduced:
May
2. 2017
Expires:
November
2, 2018
Enacted: _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective:
July
1. 2017
Sunset Date: ~No=n=e_ _ _ _ __
Ch. _ _ ,
Laws
of Mont Co. _ __
COUNTY COUNCIL
,
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Floreen
Co-Sponsors: Council President Berliner and Councilmembers Rice, Katz, and Navarro
AN EXPEDITED ACT
t9:
(1)
expand the property
tax
credit for military retirees to include a retired member of the
uniformed services, the military reserves, or the national guard; and
(2)
generally amend the law relating to property
tax
credits.
By amending
Montgomery County Code
Chapter 52, Taxation
Section 52-110, Property
tax
credit - elderly individuals and veterans
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or de.fined term.
Added to existing law by original bill.
Deleted.from existing
law
by original bill.
Added by amendment
Deletedfrom existing law or the bill by amendment.
Existing law WUI/fected by bill
The County Council for Montgomery County, Maryland approves the following Act:
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ExPEDITED BILL
No. 13-17
1
2
Sec.1. Section 52-110 is amended as follows:
52-110. Property tax credit- elderly individuals and [veterans] retired military
services members.
3
4
*
(c)
*
*
5
6
7
Eligibility.
An individual is eligible to receive a property
tax
credit if:
(2)
(A)
(B)
*
the individual is at least 65 years old;
the individual is a retired member of the uniformed services
of the United States [armed forces] as defined in 10 U.S.C.
.§1.QL
the military reserves, or the national guard; and
*
*
8
9
10
11
12
13
14
15
16
17
18
19
(C)
the dwelling for which a property tax credit is sought has a
maximum assessed value of $500,000 at the time the
individual first applied for the credit.
*
*
*
Sec. 2. Expedited Effective Date.
The Council declares that this legislation is necessary for the immediate
protection of the public interest. Section 52-110, as amended by Section 1 of this Act,
takes effect on July 1, 2017.
0
t\law\bills\1713
vet
property
tax credit\bDI 2.docx
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LEGISLATIVE REQUEST REPORT
Expedited Bill 13-17
Taxation -Property Tax Credit for Retired Military Services Members
-
Eligibility
DESCRIPTION:
Bill 42-16 would expand the tax credit for military retirees authorized
in Bill 42-16 to include a retired member of the uniformed services,
the military reserves, or the national guard.
During the 2017 legislative session, the General Assembly enacted,
and the Governor signed, House Bill 1234 which provides local
government authority to expand the military retiree tax credit to
include a retired member of the uniformed services, the military
reserves, or the national guard.
To implement authority granted by the State.
Finance
To be requested.
To be requested.
To be requested.
To be researched.
AmandaMihill, Legislative Attorney, 240-777-7815
Taxes and credits apply countywide
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
NIA
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®
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LAWRENCE
J.
HOGAN, JR., Governor
Chapter 184
Ch. 184
(House Bill 1234)
AN ACT concerning
Property Tax
-
Credit for Retired Military Service Members
-
Eligibility
FOR the purpose of expanding eligibility for a credit authorized against the county or
municipal corporation property tax for retired military service members to include
certain members of the uniformed services· of the United States, the military
reserves, and the National Guard; providing for the application of this Act; and
generally relating
to
a property tax credit for retired military service members.
BY repealing and reenacting, with amendments,
Article - Tax - Property
Section 9-258
Annotated Code of Maryland
(2012 Replacement Volume and 2016 Supplement)
SECTION
1.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article
-
Tax
-
Property
9-258.
(a)
(1)
In this section the following words have the meanings indicated.
"Dwelling'' has the meaning stated in
§
9-105 of this title;
(2)
(3)
"Eligible individual" means:
(i)
an individual who is at least 65 years old and has lived in the
same dwelling for at least the preceding 40 years; or
(ii)
an individual who is at least 65 years old and is a retired member
of the [armed forces]
UNIFORMED SERVICES
of the United States
AS DEFINED
IN
10
U.S.C.
§
101,
THE MILITARY RESERVES, OR THE NATIONAL GUARD.
(b)
The Mayor and City Council of Baltimore City or the governing body of a
county or municipal corporation may grant, by law, a property tax credit under this section
against the county or municipal corporation property tax imposed on the dwelling of an
eligible individual.
(c)
The property tax credit allowed under this section may:
-1-
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Ch. 184
2017 LAWS OF MARYLAND
(1)
not exceed 20% of the county or municipal corporation property tax
imposed on the property; and
(2)
be granted for a period of up
to
5 years.
(d)
The Mayor and City Council of Baltimore City or the governing body of a
county or municipal corporation may provide, by law, for:
(1)
the maximum assessed value of a dwelling that is eligible for the tax
credit under this section;
(2)
additional eligibility criteria for the tax credit under this section;
(3)
regulations and procedures for the application and uniform processing
of requests for the tax credit; and
(4)
section.
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect June
1, 2017, and shall be applicable to all taxable years beginning after June 30, 2017.
Approved
by
the Governor, April 18, 2017.
any other provision necessary to carry out the tax credit under this
-2-
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ROCKVILLE, MARYLAND
MEMORANDUM
June 2, 2017
TO:
FROM:
Roger Berliner, Presidlt,
County Council
Jennifer
A.
Hughes,
Dl
or, Office of Management and~et
Alexandre A. Espinos ,/ irector, Department of Finance~
FEIS for Council Expedited Bill 13-17, Taxation - Property Tax Credit for
Retired Military Services Members - Eligibility
SUBJECT:
Please fmd attached the fiscal and economic impact statements for the above-
referenced legislation.
JAH:mc
cc: Bonnie Kirkland, Assistant Chief Administrative Officer
Lily Qi, Assistant Chief Administrative Officer
Lisa Austin, Offices of the County Executive
Joy Nurmi, Special Assistant to the County Executive
Patrick Lacefield, Director, Public Information Office
David Platt, Department of Finance
Dennis Hetman, Department of Finance
Jane Mukira, Office of Management and Budget
Naeem
Mia,
Office of Management and Budget
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Fiscal Impact Statement
Expedited Bill 13-17
-
Taxation
-
Property Tax Credit for
Retired Military Services Members
-
Eligibility
1.
Legislative Summary
Expedited Bill 13-17 would expand eligibility for the property
tax
credit for military retirees
(established by Bill 42-16) to include retired member of the uniformed services, the military
reserves, or the national guard.
Bill 42-16 provides a property
tax
credit for certain property owners who are at least
65
years
of age and either
(1)
have resided in the same property for at least
40
years, or
(2)
are retired
from the military. This tax credit is available to all taxpayers.who meet these requirements
if
their property's assessed value is no more than $500,000. Proposed Bill 13-17 would expand
eligibility for
this
tax credit to include retired members of the uniformed services (including
the National Oceanic and Atmospheric Administration and the Public Health Service), the
military reserves, or the national guard.
2. An estimate of changes
in
County revenues and expenditures regardless of whether the
revenues or expenditures are assumed
in
the recommended or approved budget.
Includes source of information, assumptions, and methodologies used.
The Finance Department estimates that the expansion of the property tax credit under Bill 13-
17 would increase the number of eligible recipients by about 33 percent, from 2,153
recipients to 2,853. This is expected to result in approximately $360,000 in additional lost
property
tax
revenue. The table below outlines the methodology used to arrive at
this
estimate.
The estimated increase in recipients is based on information provided by the Maryland
National Guard and the U.S. Coast Guard, which manages retirement systems for the
National Oceanic and Atmospheric Administration and the Public Health Service. Data on
the number of retired military reservists living in Montgomery County is not readily
available, and as such, these individuals are excluded from the estimate.
ESTIMATED FISCAL IMPACT FROM BILLS 42-16 AND 13-17
Median Taxable Assessment of Properties
at
or below
$500,000
Weighted Real Property Tax Rate:
FY2018 (adopted
by
GO
Committee, May
4, 2017)
--Eslmated
Tax
Bill
Prior
to
Income
Tax
Offset Credit (ITOC)
'---------=BD=lc...c42=...:·1=6_ _ _
__.I
l~_Bi_l_l
_ _
13_-17
·~'
Uniformed SeJVices and
6S+ and 40 years
Retired
Military
National Guard
I
1)
$325,000
$325,000
$325,000
$1.0013
$1.0013
$1.0013
$3,254
$3,254
$3,254
($692)
$2,562
20.00%
($692)
$2,562
20.00%
$512.45
1,964
$1,006,442
($692)
$2,562
20.00%
$512.4S
····--·::··"f'".·'·· ..
_100,
-ITOC: FY2018 (adopted
by
GO
Committee,
May 4, 2017)
-·Estimated Tax BIii with ITOC
-Allowable
Credit
Section
52-llO(d)(l)
Amount of Allowable
Credit
Number of
Estimated Recipients
Estimated Loss of Property Tax Revenues:
FY2018
TOTAL ESTIMATED PROPER'TY TAX LOSS FROM
Bill Bill
42-16 AND BILL 13-17
$512.4S
189
$96,852
f
__. . . . . ' . : "
L'.:.
"· · .·· .,.·
$358,712
$1,462,006
32.5%
Bill 13-17
Increase
ovar BID 42-16 In number
of
Estimated
Recipients
1 of3
(f)
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Fiscal Impact Statement
Expedited Bill 13-17
-
Taxation
-
Property Tax Credit for
Retired
Military
Services Members
-
Eligibility
'
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
The estimated additional tax credit given as a result of Expedited Bill 13-17 is approximately
$360,000. Combined with the impact of the tax credit under Bill 42-16, the total annual
amount of these tax credits is approximately $1,460,000 (see table in #2), not including any
credits given to retired military reservists. Over six years, lost revenue from th~ expansion of
this
tax
credit is estimated at $2.16 million ($360,000 x 6), and the total impact, including the
original
tax
credit,
is
estimated at $8. 76 million ($1.46 million x 6).
4. An actuarial analysis through the entire amortization period for each bill that would
affect retiree pension or group insurance costs.
Not applicable.
5. An estimate of expenditures related to County's information technology (IT) systems,
including Enterprise Resource Planning (ERP) systems.
Not applicable.
6. Later actions that may affect future revenue and expenditures
if
the bill authorizes
future spending.
-
None. Expedited Bill 13-17 does not authorize future spending.
7. An estimate of the staff time needed to implement the bill.
It is estimated that additional staff resources up to one position is needed to administer the
original law, and this bill adds approximately 1/3 more accounts that will be eligible for the
tax credit. However, this additional workload can be absorbed within the additional
resources indicated for Bill 42-16.
8. An explanation of how the addition of new staff responsibilities would affect other
duties.
The Department of Finance currently administers 20 tax credit programs and two
tax
deferral programs with one dedicated position. The scope of
this
new
tax
credit program,
though incremental on an on-going basis, is such that additional dedicated resources are
needed to continue to effectively and efficiently administer these programs.
If no additional staff resources are granted,
it
will impact the department's capacity
to
implement the bill in
a
timely manner.
2
of3
(i)
i .
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Fiscal Impact Statement
Expedited Bill 13-17
-
Taxation -Property Tax Credit for
Retired Military Services Members
-
Eligibility
9. An estimate of costs when an additional appropriation is needed.
Not applicable.
10. A description of any variable that could affect revenue and cost estimates.
The number of eligible applicants may be higher or lower than estimated. There may be
applicants that are ineligible because their initial property value is over $500,000.
11. Ranges of revenue or expenditures that are uncertain or difficult
to
project.
See above.
12. If a bill is likely to have no fiscal impact, why that
is
the case.
Not applicable.
13. Other fiscal impacts or comments.
Not applicable.
14. The following contributed
to
and concurred with this analysis:
Dennis Hetman, DavidPlatt and Mike Coveyou, Department of Finance
Jane Mukira, Office of Management and Budget
3 of3
(jJ
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Economic Impact Statement
Expedited Bill 13-17 Taxation
-
Property Tax Credit for
Retired
Military
Services Members
-
Eligibility
Background:
Expedited
Bill
13-17 (Bill) would expand the property tax credit for military retirees
to
include a
· retired
member of the uniformed services, the
military
reserves, or the national
guard.
The Bill
would implement authority granted in House Bill 1234 that was enacted by the General
Assembly during
the
2017 legislative session. Under current County law,
an
individual would be
eligible
to
receive
a
property
tax
credit
if:
I)
the individual is at least 65 years old and: (a) has
lived
in
the same dwelling for-at least the preceding 40 years; or
(b)
is
a retired member of the
United States armed forces
and
2)
the dwelling for which
a
property
tax
credit
is
sought
has
a
maximum assessed value of$500,000. Bill would am.end Section 52-110(2)(B) of
the
County
Code to include "uniformed services of
the
United States
as
defined
in
10
U.S.C. §101, the
military
reserves, or the national
guard.
1.
The sources
of
information, assumptions, and methodologies
used.
Sources
of information:
• Data for National Guard retirees are from
the
Maryland National Guard;
data
for NOAA
and PHS uniformed services are from the
U.S. Coast
Guard
(which manages the
retiremen~ system for both NOAA and PHS), and
• · There are no data on retired military reservists currently available, so the estimate does
not include military reservists.
The Department of Finance has formulated an estimate of the annual property
tax
credit as a
result of the
Bill
assuming
a median
taxable assessment base of $325,000 for properties valued
less
than
$500,000 and
a
real property tax rate of$ 1.0013 and
an
income tax offset of
$692.
According to the sources ofinformation, the Department of Finance estimates the number of
recipients excluding military reservists
is
approximately 700.
2. A description of any variable tb_at could affect the economic impact estimates.
Given the assumed totals, the Finance estimates the amount
of
credit granted in the first year
to be approximately $360,000. The variables that could affect the economic impact estimates are
the number of properties
that
are
assessed at more than $500,000.
It
is
likely
th.at a significant,
though
not determinable number, of the estimated applicants would not be eligible because
the
values
of their property exceeds $500,000. The other variable that could affect estimates
includes the number
of
retired uniformed personnel over the age of
65,
3. The Bill's positive or negative effect,
if
any on employment, spending, savings,
investment, incomes, and property values in the County.
Based on the assumptions
and
calculations, Bill
could
have a de
minimis
positive economic
impact on
the
personal income specifically for those individuals over the age of
65
and retired
uniformed personnel who
qualify
for the credit.
On
a
per household basis
the
credit
equates
to
approximately $513 per year for those eligible.
1
of2
@
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Economic Impact Statement
Expedited Bill 13-17 Taxation
-
Property Tax Credit for
Retired Military Services Members
-
Eligibility
4. Ha Bill
is
_likely
to have no economic impact, why is that the case?
This legislation will have an economic impact. See paragraph #3
5.
The following contributed
to
or concurred with this analysis:
David Platt, Dennis
Hetlnan, and Robert Hagedoorn, Finance.
r-/11,
;~,7
Alexandre
A.
Espinosa, Director
Department of Finance
Date
2of2
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Montgomery County Chapter
P.O. Box 34127
West Bethesda, Maryland 20827-0127
Testimony of David
H.
Peterson on Council Bill
13-17
Good afternoon, Mr. President and members of the Councll. My name is
David H. Peterson, and I am here today on behalf of the members of the local
Montgomery County affiliate of the Military Officers Association of America
(/V10AP,). MOAA is the fourth largest military service organization in the country,
and its
400+
local affiliate chapters are non-partisan advocates forthe Nation's
uniformed services community.
!
appeared before you previously to endorse Council Bill
42-16,
but also
asked for your support by requesting members of the county delegation to the
General Assembly to offer amending legislation to House Bill
898
that would
expand the property tax credit eligibility to members of the more inclusive
"uniformed services" as opposed to restricting eligibility solely to the "armed
services." The Council took that request under advisement and ultimately was
able
to
find a delegation sponsor to introduce such legislation.
For
that our
chapter members express our thanks.
Delegate Jheanelle Wilkins spons•:ired House
Bill 1234,
with two additional
county delegation members among the co-sponsors. On behalf of the
Montgomery County Chapter, and with the additional endorsement of the
MOAA Maryland Council of Chapters,
I
testified before both overslght
committees of the General Assembly, asking
for
a Favorable recommendation
on the legislation. This legislation was passed and the Governor signed the bill,
creating the opportunity now for the County Council to address the expanded
eligibility through Council Bill
13-17.
With great respect and thanks,
!
ask today for your favorable vote on Bill
13-17,
bringing Montgomery County into congruence with the enabling State
legislation. To my knowledge, Montgomery County would then be an early
leader in Maryland on this legislative initiative.
Respectfully submitted,
Captain David H. Peterson, NOAA {Ret)
President, Montgomery County Chapter
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James
L.
Tully - Testimony - June 13, 2017
Montgomery County Council Public Hearing: Expedited Bill 13-17, Taxation
-
Property Tax Credit for Retired Military Service Members
-
Good Afternoon, My name is Jim Tully and I have been a resident of Rockville for 50 years. My
wife and I bought our house 47 years ago for $50,000, and paid off the mortgage over the next
25 years. We are both well over 65, retired, and live on Social Security and a modest pension.
Our 2016 real estate tax assessment is now $9,758 a year, nearly 20% of the purchase price!
The subject legislation, as I understand it, is aimed at helping qualified senior citizens and
veterans stay in their homes, by granting them a credit on their real estate taxes.
As a long time home owner myself, I know the home owner has little control over the valuation
of his home, nor is the assessed valuation a reliable indicator of the owner's wealth, or his
ability to pay.
The issue I would like to address today is the cap of $650k in assessed valuation. But perhaps
more importantly the disparity it engenders. For example, you may have two otherwise
qualified homeowners living in the same neighborhood, one house is assessed at $648K and the
property next door is assessed at $652k. One owner receives the credit and the other is denied
the credit. It seems patently arbitrary and unfair.
I would like you to consider amending the wording such that all otherwise eligible homeowners
would receive the credit on up to the first $650k of assessed valuation, (or whatever number
might be set for the cap in the future). Any valuation above that figure could be taxed at
ordinary rates. That would be a more equitable way to achieve the intent of the legislation, and
to avoid the inherit unfairness of an arbitrary cap. If you have no questions, that concludes my
testimony.
Thank you,
James
L.
Tully
11 Hastings Circle
Rockville, MD 20850
Tel: 301-424-3186
e-ma ii: jima ndsiegitu Ily@verizon.net