By Adam Pagnucco.
One of the key claims made by some opponents of Question B (Robin Ficker’s latest charter amendment on taxes) is that it will harm schools by limiting growth in property tax revenues. For example, former County Council Member Bruce Adams wrote on Maryland Matters: “Ficker’s amendment would not let even a unanimous council act to preserve our quality schools and services.” Former County Executive Ike Leggett also told MCM in an interview that it could “certainly impact schools.”
Is that true?
First, let’s remember what Question B would actually do. Right now, the county charter limits annual growth in property tax receipts to the rate of inflation (with a few exceptions) unless the county council unanimously votes to go over the limit. The last time that happened was in 2016, when the council voted to increase property taxes by 8.7%. Question B would remove the ability of the council to exceed the limit, thereby imposing an absolute cap on property tax revenue growth at the rate of inflation. (Question A, a competing tax limit charter amendment authored by Council Member Andrew Friedson, would raise far more revenue than Question B over time.) Because of Question B’s limit on revenue growth, some opponents criticize it for potentially damaging many different kinds of county services, including schools.
But school funding is different from most other kinds of funding when it comes to charter limits. The reason for that lies in a fight between the counties and the state back in 2012. At that time, the counties were struggling with the budgetary effects of the Great Recession and several of them had cut local per pupil school funding below the floor established by the state. The state responded by passing SB 848, which made a number of changes to the state’s maintenance of effort law on school funding. One of them allowed counties to circumvent their charter limits to fund school budgets. (State law preempts county charters.) The exact language of this part of the bill, which is now contained in Md. Education Code Ann. § 5-104(d)(1), reads:
Notwithstanding any provision of a county charter that places a limit on that county’s property tax rate or revenues and subject to paragraph (2) of this subsection, a county governing body may set a property tax rate that is higher than the rate authorized under the county’s charter or collect more property tax revenues than the revenues authorized under the county’s charter for the sole purpose of funding the approved budget of the county board.
That means that a county can exceed its charter limit for the purpose of funding its school budget. A majority of county council votes are all that is required to raise property taxes for MCPS’s operating budget regardless of what MoCo voters put in the charter.
Five counties in Maryland have charter limits on property taxes: Anne Arundel, Montgomery, Prince George’s, Talbot and Wicomico. Since the maintenance of effort law was changed in 2012, three of them – Anne Arundel, Prince George’s and Talbot – took advantage of their new authority under state law to circumvent their charter limits and raise taxes for schools. (Talbot did it three times.) Montgomery County Executive Marc Elrich proposed doing the same in his FY21 recommended budget, but the council rejected his tax hike. (It’s not a coincidence that then-budget director and current Chief Administrative Officer Rich Madaleno was one of the architects of the school funding exemption when he was in the State Senate.)
There are two ways in which Question B would indirectly affect MCPS. First, property taxes are a major source of revenue to pay off debt service, which is required to finance bonds issued for school construction. If reduced growth in property taxes impacts debt service, MCPS’s capital budget could become tighter. Property taxes also generate cash that goes into some school capital spending (like technology modernization). Second, county departments outside MCPS contribute ancillary services that benefit the schools. Examples include health and human services (school health nurses, health room technicians, childhood wellness, linkages to learning), police (crossing guards and school resource officers), libraries (research and internet resources) and recreation (sports academies). These services are not inside MCPS’s local appropriation and would be impacted by Question B.
Over time, Question B if passed would probably result in two pots of property tax money – one exclusively for the MCPS operating budget requiring a majority of council votes to increase, and another for everything else with growth capped at inflation. Smart people like Madaleno and the county’s budget analysts can figure out how to move money around to avoid the worst effects of this. Question B would still be a challenge to the county’s finances, a distortion to its budget process and an impediment to funding police, fire service, parks, libraries, road maintenance and more. That’s reason enough to vote against it. But the bottom line is that Question B would do far less to hurt MCPS than the rest of county government.
