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Commissioners ask staff for analysis on homestead cap, energy tax and revenue changes as county revenue outlook shifts
Summary
Finance staff reported a $3 million improvement in revenue projection since December but flagged risks: rising military disabled exemptions, pending SDAT homestead cap decision, and the county’s energy tax. Commissioners directed staff to return detailed analyses on homestead cap adjustment options and the energy tax.
St. Mary’s County finance staff updated the Board of County Commissioners on revenue projections and tax‑policy options during the Feb. 25 work session and commissioners asked for additional analyses before March 15 state deadlines.
Veneta Van Cleave, the county CFO, said the county’s revenue projection increased by about $3 million since the December projection, largely because of higher penalty and interest receipts tied to prior income‑tax payments and revised interest projections. She cautioned that the federal budget outlook and possible grant funding changes create ongoing uncertainty for FY26 revenues.
Open items discussed by commissioners included: (a) a pending State Department of Assessments and Taxation (SDAT) decision that will affect homestead assessments and statutory caps, (b) a reported surge in military disabled exemption claims (county figures rose from prior years to about $4.7 million in FY24 collections), and (c) the county’s energy tax (currently generating about $325,000 in budgeted revenue). Several commissioners expressed support for zeroing out the energy tax and asked staff to return a short analysis showing the revenue impact.
On homestead cap policy, the board discussed potential moves from a 3% cap to a 2% cap (or intermediate options such as a 2.5% cap). Finance staff said lowering the homestead cap from the present 3% to 2% would increase county revenue by roughly $1.8 million compared with staying at 3% (the transcript shows county staff will provide precise figures for alternatives). The county must finalize any homestead cap decision for SDAT by March 15 to affect the tax bills calculation.
Commissioners gave staff direction to prepare: (1) a homestead cap analysis showing the fiscal effect of 2.0%, 2.5% and other options, (2) a short memo quantifying the revenue effect of zeroing out the county energy tax, and (3) an update on the scope and growth of military disabled exemptions and whether legislative action or local policy can limit fiscal exposure.
Why it matters: Homestead cap choices and other exemptions materially affect property‑tax revenues used to fund county services, schools and capital projects. The March 15 timing for SDAT makes this a near‑term decision point.
What’s next: Finance staff will return to the board with the requested tables and options in time for the next budget discussion and before SDAT and public‑hearing deadlines.
