St. Mary’s County staff outlines $3 million revenue risk from proposed House Bill 184; commissioners discuss local options

St. Mary’s County officials told the Board of Commissioners on Feb. 9 that House Bill 184, as drafted for St. Mary’s County, would eliminate most personal property tax except for public utilities and could reduce county revenues by roughly $3 million a year.

County Chief Financial Officer Elaine Kramer summarized the draft bill and the county memo attached to the meeting package, saying the draft would first exempt newly acquired personal property and then phase out all personal property taxation except utilities. Kramer told commissioners the county’s FY2015 budget shows personal property revenue lines that total about $3.1 million but that she used a conservative rounded figure of $3,000,000 for illustration.

The memo presented by Kramer explained how the revenue loss could be replaced only by either sharply higher real‑property assessments, other tax increases or equivalent cuts in spending. Kramer calculated that to offset a $3 million loss at the county’s current tax rate (about 85.7 cents per $100 of assessed value), the county would need roughly $350 million of additional assessed real property value — an amount well above current growth projections.

Kramer also put the county’s revenue position in context with neighboring jurisdictions. She showed state data comparing per‑capita property and income tax receipts and noted St. Mary’s ranks lower on “effort” measures; those comparisons, she said, suggest the county has less taxable base to absorb revenue losses than Frederick County, which the bill’s supporters cited as a model.

Commissioners raised two recurring themes: the economic argument behind removing a tax that falls on business equipment, and the short‑term budget implications. One commissioner said the personal property tax discourages businesses from buying new equipment and voiced strong support for the bill as written; another commissioner urged caution, pointing out the county must still balance the FY2016 budget and could have to cut expenditures or find replacement revenue if the state removes the county’s personal property tax without providing offsets.

Kramer and members of the board discussed options the county already has under state law. Kramer said counties have flexibility to “decouple” their personal property tax rate from the historical statutory multiplier tied to the real‑property rate and can reduce the personal property rate locally on a chosen schedule. She told commissioners, “you have the ability right now, under law, you have the flexibility to decouple. You could drive it to 0 on your own schedule.” Kramer also reported that Delegate Morgan indicated the bill’s drafters were open to changing the phase‑in schedule and that some utilities revenue estimates could reduce the gross impact slightly.

Commissioners and staff noted the bill as filed and the governor’s separate proposal — a $10,000 per‑taxpayer exemption for personal property — were both moving through the legislative process, and both could alter the county impact. Kramer recommended the board incorporate any likely change into the FY2016 financial model and continued to flag the risk of a near‑term structural imbalance if the revenue is eliminated without corresponding expense reductions or replacement revenue.

Next steps identified during the work session included further analysis and follow‑up briefings at subsequent budget work sessions. Staff said they would model impacts under different phase‑in schedules, show alternatives for local decoupling, and provide more detailed revenue segmentation when SDAT and other data were available.

The board did not take any formal vote on HB 184 during the session. Kramer urged commissioners to treat the discussion as the first step in a multi‑week budget process that would revisit compensation and retiree benefits alongside any revenue changes.