By Adam Pagnucco.

Part One recounted the history of Montgomery County voters placing limits on the county’s ability to raise property taxes.  Under current law passed by voters in 2020, a unanimous vote by the county council is required to raise the property tax rate.  Council Members Sidney Katz and Gabe Albornoz would like to replace this limit with a two-thirds vote instead.

What should we make of this?  I don’t have a simple view on this issue.  Rather, I had three different reactions before reaching a final conclusion.

Reaction 1: It’s ridiculous for one council member to have the ability to block anything.

When I worked at the county council, I was taught by the old guard there (you know who you are!) that one council member could do very little but a council majority could accomplish a lot.  That latter thought encouraged collaboration during all of the inevitable competition between offices, which is a core part of the yin and yang of the place.  Allowing one council member to exercise veto power over everyone else – on anything – is questionable public policy and injurious to the council’s culture.  On this point, I am sympathetic to Katz and Albornoz.

Reaction 2: The 2020 ballot campaign on property taxes now looks like a bait and switch.

In 2020, anti-tax activist Robin Ficker petitioned a charter amendment to the ballot that would have eliminated the council’s ability to override the limit.  Council Member Andrew Friedson authored an alternative that kept the unanimous override requirement but restructured the calculation of the limit.  A huge assemblage of groups teamed up to pass Friedson’s amendment and defeat Ficker’s.  Part of their sales pitch involved the retaining of the existing unanimous override requirement.  This too was a tight limit on property taxes, they argued, but one that made more sense than Ficker’s.

Now, just four years later, apparently some minds have changed on a key element of the case made to voters.  Were we persuaded to pass a strong limit only to set up a weaker one just four years later?  While I have some sympathy for the argument stated above, Part One recounts how voters supported a unanimous limit no fewer than three times (2008, 2018 and 2020) and their opinion deserves respect.  Accordingly, this whole exercise feels like a bait and switch and an abuse of the council’s authority to place charter amendments on the ballot.

Reaction 3: The state has already effectively killed county charter limits so ours may not matter much.

In March 2023, I wrote a post titled The Hand of the King that explained how the state allowed counties to evade their charter limits to fund school budgets.  Five Maryland counties have charter limits on property taxes: Anne Arundel, Montgomery, Prince George’s, Talbot and Wicomico.  All except Wicomico have exploited the loophole in state law to break their limits by dedicating the revenues to school systems at least once.  MoCo did so last year, and when it did, many county departments got big increases and some had even larger increases than what was given to MCPS.  This illustrates the fungibility of money and proves that the state has effectively killed county tax limits.

Given that reality, the present discussion seems unnecessary.  The council can already get around its charter limit by “dedicating” a tax hike to MCPS and then moving around any existing revenue growth however it wants.  Is the juice in this debate really worth the squeeze, folks?

My Conclusion

The debate among MoCo politicians, who seem unable to conceive of accomplishing much without spraying money at it, seems ALWAYS to be about how to raise taxes.  Instead, their attention should be directed to a much more important issue that I recently addressed in a six-part series: the county’s non-competitive economy.  I have written essentially the same column so many times that I can no longer count all of them: we trail the huge majority of our regional competitors on most economic indicators.  No matter how many times I print this, it never seems to change.

The merit of Friedson’s charter limit is that it applies to the property tax rate and not to the volume of collections.  With a constant rate, robust economic growth produces robust county revenue growth.  It’s a clear incentive for county officials to do everything in their power to supercharge the economy and help employers create lots of high-paying jobs.  That’s exactly how it should be.

If instead the discussion is all about how to increase the tax rate, that’s a clear signal to job creators that they should take their jobs elsewhere.  That approach depresses the tax base and is ultimately self-defeating.  One recent example comes from 2023, when a large increase in recordation tax rates coincided with an absolute drop in tax collections.  One wonders if such phenomena will eventually apply on a broader scale to the entire real estate industry.

So in the end, this whole debate misses the point.  We gain nothing by being known as the county that wants to make raising taxes easier.  Let’s be known as the county that wants to have the strongest economy in the D.C. region instead.