Prince George's to Gov: We're Less Wealthy Than You Think
And now for a full-on wonk topic that has the possibility of bursting into raw politics in Annapolis in the next few weeks: how the state calculates the net taxable income of each county.
The topic consumed a good two-hour discussion by the Prince George's delegation late Thursday. Its members are convinced that's the reason the county's state aid has gone down this year more than any other local jurisdiction.
Here's the deal. Before putting together a budget each year, the state first goes about deciding the relative wealth of each county. The wealth figures are used in a series of complex formulas that result in more affluent counties getting less state aid, on the theory that they are better positioned to pay for core services using their own tax base.
This year, falling property values and income meant that Montgomery's wealth declined.That's one reason why the county's state aid, which starts lower than other counties because of its relative affluence, grew by 7.7 percent in Gov. Martin O'Malley's proposed budget. In comparison, Prince George's grew more wealthy, and, as a result, its aid declined by 1.2 percent.
That doesn't exactly make the county's lawmakers happy. And here's the rub, from their point of view. The state decides how wealthy the counties are by looking at property assessments and income levels. Income is calculated by examining federal income tax returns each year on Sept. 1.
Why that date? Because until 2005, the last day to submit an income tax filing with a penalty-free extension was Aug. 15. But three years ago, the federal government changed the law. Now, you can submit taxes as late as Oct. 15, with no penalty.
People who submit their taxes that late tend to be those with more complicated returns. That is to say, rich people. Because Maryland has not changed the date it examines net taxable income, Prince Georgians contend a lot of high income people are missed when the wealth counters come through. Thus, wealthy counties may look poorer than they are and receive more state aid, while poorer counties may look more wealthy and get less.
How much less? According to figures put together by Prince George's budget crunchers, the county would have gotten $95 million more over the last three years in one area of state aid alone if the state had moved to a Nov. 1 date in 2005 when the federal change was made.
Now, some county lawmakers are seeking a change in the law to do exactly that. Any legislation on the topic would likely cause a pretty serious rift with Montgomery County. After all, as the budget pie shrinks in tight times, Prince George's gain in such a change would be Montgomery's loss, because it would suddenly look more wealthy.
Leaders of the two jurisdictions met on the issue this week and apparently agreed they would try, somehow, to work together on the zero-sum issue.
But if you have any doubts about the pure politics of the thing, take at this question from the often combative Sen. Nathaniel Exum (D-Prince George's), directed at O'Malley aide Joe Brice at Thursday' delegation meeting about the county's budget cuts:
"It is clear Prince George's County has been hurt by these cuts," he said. "We want to know what the governor is going to do to rectify this? Because next year is 2010. And who is the governor going to look for in his reelection campaign?"
Brice responded that O'Malley would try to bring all lawmakers together and work with them on the budget.
"As long as he is aware," Exum shot back.
January 30, 2009; 12:09 PM ET
Categories: General Assembly , Rosalind Helderman
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