GO ITEM4
June 22, 2017
Worksession
MEMORANDUM
June 20, 2017
TO:
FROM:
SUBJECT:
Government Operations and Fiscal Policy Committee
Amanda Mihill, Legislative Attorney uJl'r',lt.lw
Worksession:
Expedited Bill 13-17, Taxation - Property Tax Credit for Retired
Military Services Members - Eligibility
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.
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
1.
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. Nevertheless, the staff from the Department of Finance will be
at the worksession and prepared to discuss the potential fiscal impact of
Mr.
Tully's suggestion. At that time, the
Committee may wish to discuss sponsoring a bill to implement
Mr.
Tully's suggestion.
1
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Discussion
As Committee members 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.
This packet contains:
Expedited Bill 13-17
Legislative Request Report
House Bill 1234
Fiscal Impact Statement
Testimony/Correspondence
F:\LA W\BILLS\1713 Vet Property Tax Credit\GO Memo.Docx
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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)
(2)
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
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 defined term.
Added to existing law by original bill.
Deleted.from existing
law
by original bill.
Added by amendment
Deleted.from 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. 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
5
(c)
*
*
Eligibility.
An
individual is eligible to receive a property
tax
credit if:
*
*
6
*
*
7
(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 IO U.S.C.
.§lQL_
the military reserves, or the national guard; and
8
9
10
11
12
13
14
(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.
*
*
*
15
16
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 I of this Act,
takes effect on July I, 2017.
17
18
19
0
f:\law\bil!s\1713
vet
property
tax
credit\bill
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 IMP ACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
NI
A
F:\LAW\BILLS\1713 Vet
Property
Tax Credit\LRR.Docx
®
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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;
"Eligible individual" means:
(2)
(3)
(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, Presildt,
County Council
or, Office of Management and~dget
Jennifer A. Hughes,
Dl
Alexandre A. Espinos
,i
irector, Department of Finance~
FEIS for Council Expedited Bill 13-17, Taxation - Property Tax Credit for
Retired Military Services Members - Eligibility
SUBJECT:
Please find 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
L----Bllc.=.-14=2-=16'--_ _
65+ and 40 years
__.I L..I
--=a11=1
u=-·-=11_
__.
U
nlform~
Services and
Median Taxable Assessment of Properties
at
or below $500,000
Weighted Real Property Tax Rate; FY2018 (adopted by GO Committee, May 4, 2017)
--Esimated Tax
Bill
Prior to Income Tax Offset Credit
(ITOC)
$325,000
$1.0013
$3,254
Retired Miritary
$325,000
$1.0013
$3,254
($692.)
National Guard (1)
$325,000
$1.0013
$3,254
($692)
-ITOC:
FY2.018 (adopted by
GO
Committee, May
4,
2017)
··Estimated Tax BIii
with
rroc
-Allowable Credlt: Section 52·110(d)(1)
Amount of Allowable Credit
Number of Estimated Recipients
Estimated Loss of Property Tax Revenues:· FY2018
TOTAL ESTIMATED PROPERTY TAX LOSS FROM BILL BILL 42·16 AND BIU 13-17
SOI 13-17 Increase over Blll 42-16 In number of Estimated Recipients
($692)
$2,562
20.00%
$512.45
189
$2,562
20.00%
$2,562
20.00%
$96,852
$512.45
1,964
$1,006,442
t< .' ....
i ...':..\:.:'.:
.!
....J~~s__
00
..:
$358,712
$1,462,006
32.5%
1 of3
(j)
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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.
2of3
(j)
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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, David Platt and Mike Coveyou, Department of Finance
Jane Mukira, Office of Management and Budget
3 of3
®
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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 amend Section 52-110(2)(B) of the County
Code include "uniformed services
of
the
United States as defined
in
10
U.S.C.
§101, the
military
reserves, or the
national guard.
to
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
retirement 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 asswning 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
of
information, the Department of Finance estimates the number of·
recipients excluding military reservists is approximately 700.
2, A description of any variable th_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 that
a significant,
though not determinable number, of the estimated applicants would not be eligible because
the
values of their property ex~eds $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 minim.is 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
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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
Hetman, and Robert Hagedoom, Finance.
r-/
1~
/2o17
Alexandre
A.
Espinosa, Director
Date
Department of Finance
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
Sood afternoon, Mr. President and members of the Council. My nome is
David H. Peterson, and I am here today on behalf of the members of the local
tviontgomery County affiliate of the Military Officers Association of America
(MOAA).
.IV10A.A.
is the fourth largest military service organization in the country,
ond
its
400+
local affiliate chapters ore non-partisan advocates
for
the Nation's
uniformed services cornmunity.
i
appeared before you previously to endorse Council Bi!I
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 rnore inclusive
"uniformed services"
as
opposed to restricting eligibility solely
to
the "armed
services." The Councii 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 Jl1eane1le Wilkins sponsored 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 oversight
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 Bili
13-17.
With great respect and thanks,
1
ask today for your favorable vote on Bill
13-17,
bringing Montgomery County into congruence with the enoblfng 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-mail: jimandsiegitully@verizon.net