March 22, 2010

Prince George’s to keep disparity aid, pushes for education fix

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By Erich Wagner
Erich@MarylandReporter.com

Prince George’s County is poised to reclaim $18 million in state aid for next year under a Senate budget proposal, but county lawmakers are still pushing for a permanent solution to an issue they say could continue to jeopardize both local and school aid.

The county was slated in Gov. Martin O’Malley’s proposed budget to lose that money in the state’s “disparity grant” program, which helps poorer jurisdictions provide services that are roughly equivalent to those in richer counties.

Lawmakers representing the county said the cut came as a result of an outdated formula that does not accurately reflect richer counties’ wealth. They complain that the system calculates average wealth prior to the federal government’s extension deadline for tax returns, and many high earners use the extension.

The Senate Budget and Taxation Committee voted to change the reporting date used to calculate wealth for disparity grants to coincide with the federal tax deadline. But Prince George’s and Montgomery County lawmakers disagree on whether the change should apply to other state aid formulas.

Senator Richard Madaleno, D-Montgomery, said the change to disparity grants came because Prince George’s County made a “compelling case” that the formula unfairly affected their jurisdiction. But he said attempts by Prince George’s County lawmakers to make similar tweaks to education funding formulas would not make it through the General Assembly.

“There are so many variables in that formula, and none of it is perfect,” Madaleno said. “If you open up one piece and change it, then you have to look at all the pieces that could benefit some and hurt others. We should leave it in place, it’s a formula we’ve had in place literally for decades.”

Average wealth, combined with localities’ property tax base, determines state education aid to counties. However the reporting date will not change in that formula as part of a compromise reached by senators from Prince George’s and Montgomery counties, said Budget and Taxation Chairman Ulysses Currie, D-Prince George’s.

The dispute over the reporting deadline comes from a change in federal tax law that moved the deadline for the automatic extension for income tax filings from August 15 to October 15, six weeks after the state records average wealth.

Del. Justin Ross, D-Prince George’s, said federal government already unintentionally changed the state formulas when it moved the automatic extension deadline. He said changing other formulas to conform with the shift could save his county $30 million.

“I think we should change it back to the way it was for literally decades,” Ross said.

Madaleno argued the tax deadline was not a “major change,” because taxpayers could voluntarily file for a second extension to the same date as the current October 15 deadline. But Ross disputed this point as well.

“If it wasn’t such a big difference, why did it change the numbers so dramatically?” Ross said.

Despite their difference of opinion, Ross said he was grateful for Montgomery County’s support.

“Prince George’s County has no greater friend than Montgomery County in the legislature,” Ross said. “I wanted the full $30 million, but if we can get $18 million this year, hell yeah.”