SDAT budget faces contingency from BRFAA; CRIS IT costs and tax credits draw scrutiny

The Department of Legislative Services told the Health and Human Services Subcommittee on Feb. 7 that the State Department of Assessments and Taxation’s (SDAT) fiscal 2026 allowance contains contingent reductions tied to provisions in the Budget Reconciliation and Financing Act and that several program trends and an IT modernization project require committee oversight.

"The fiscal 20 26 allowance decreases by $7,600,000 or 4.3% to $168,900,000 compared to fiscal 25," David Probert, a DLS analyst, told the subcommittee when he introduced SDAT’s analysis. Probert said the fiscal 2026 budget includes a $28.1 million contingent reduction driven principally by a BRFAA provision that would change the local-state cost-share for certain SDAT costs from a 50/50 split to a 90/10 split. That provision would swap approximately $20.9 million in general funds for special funds; DLS calculated the correct contingent adjustment should be $21,231,952 and SDAT agreed to that correction.

Probert also summarized changes to SDAT’s tax credit and assessment programs: the homeowners’ tax credit account for roughly two-thirds of tax credit spending in the allowance ($56 million), enterprise zone tax credits account for about $20.8 million after contingent reductions, and the renter’s tax credit experienced a spike in fiscal 2024 before leveling. DLS recommended SDAT explain recent fluctuations in homeowners’ and renters’ tax-credit utilization and to provide additional reports related to SDAT’s cloud revenue integrated system (CRIS) IT modernization project.

SDAT Director Dan Phillips said the agency has undergone a leadership transition and has completed a move to new headquarters in Baltimore City. Phillips described customer-facing changes, including reopening an in-person counter for tax credit and business services and implementing an online appointment system. He said the CRIS migration to a cloud platform will allow the department to move away from legacy mainframe systems and will improve customer experience and flexibility.

Phillips acknowledged DLS’s finding that CRIS costs have risen and said increases largely stem from added end-user functionality and legislatively mandated scope changes, including modifications related to the homeowner protection program. DLS listed total fiscal 2026 project funding for CRIS at $37.7 million and said costs have increased substantially in recent years.

DLS highlighted workforce concerns for SDAT’s real property valuation program and noted an improvement in vacancies after July 2024 following salary increases for assessors. SDAT reported 30 total vacant positions as of Dec. 31, 2024, with only four vacant more than one year; SDAT said salary enhancements implemented July 1 improved recruitment and retention.

On questions about heirs and misclassified properties, Deputy Director Bob Yeager said SDAT has worked with advocates and has introduced legislation to allow heirs to access relief programs such as the homeowners’ tax credit and the homeowner protection program. Yeager described new outreach materials and guides SDAT plans to provide advocates and property owners to explain how classification and owner-occupancy status are determined and how to correct errors.

DLS recommended the remaining $25,000 in previously withheld general funds be released after SDAT submitted required reports and suggested committee narrative requesting additional updates on CRIS. The subcommittee raised no formal objections during the presentation.

SDAT said it will continue to provide requested data, pursue legislative and regulatory changes needed to implement mandated program changes, and work with partner agencies to improve data sharing and audit functions to detect improper tax credit payments.