February 25, 2011

Conservative delegate persuades O’Malley to support cut in death taxes on family farms

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By Len Lazarick
Len@MarylandReporter.com

Del. Kathy Afzali

A newly elected conservative Republican legislator has pulled off a fairly remarkable feat: Frederick County Del. Kathy Afzali persuaded Gov. Martin O’Malley to support and personally testify on her bill to cut death taxes on family farms.

Afzali’s bill mirrors federal law and exempts the first $5 million in value of a family farm from Maryland estate taxes, and then puts a 5% death tax on the remaining value. The current tax rate is 16% on any property worth more than $1 million.

Not only is O’Malley on board, but so are 42 other delegates, including 17 Democrats, some from the liberal Washington suburbs. Afzali said the Chesapeake Bay Foundation also supports the measure.

“I’m sitting on the greenest bill in the state legislature, and the most pro-farm,” Afzali said. “It is very possible for Republicans to be green.”

“There’s nothing better to protect more open space than a farm,” Afzali said. “If our farms start going out of business, where do we go for our food?”

O’Malley spokesman Shaun Adamec confirmed that the governor plans to testify for the legislation at its hearing next Thursday, a bit unusual for a proposal that is not part of his own legislative package.

“I think it speaks to how strongly he feels about preserving farmland,” Adamec said. “It’s a bill that will help Maryland farmers,” especially given the concerns farmers have expressed about O’Malley’s proposed restrictions on septic systems on subdivided farms.

Lawmakers from farm country – mostly rural Republicans – have been up in arms about the septic plan.

Afzali said she approached the governor at the Maryland Agriculture Council annual dinner Feb. 7. She explained the bill to him, and according to Afzali, he said, “Yep, you’re right. It’s time we change this.”

She and Democratic Sen. Ron Young from her district, the Senate sponsor, then met with Agriculture Secretary Buddy Hance.

After that, “I went to every Democrat I knew” to sign on co-sponsors, Afzali said.

Afzali admitted that the biggest hurdle for the bill may be how much it will cost the state, and she has yet to see those figures. Such fiscal notes are typically finished shortly before the hearing.

According to the Board of Revenue Estimates, death taxes are highly volatile but bring in about $200 million a year. Farms would likely make up a small percentage of that, Afzali said.

“You’ve got to look at these things on a long-term basis,” Adamec said, not any immediate revenue loss.

Support for this bill is also consistent with the subsidies O’Malley supports for the race tracks and horse racing industry, which the governor sees as a way to preserve horse farms, open space and the jobs they provide.

“Creating jobs and savings jobs is not just in the I-270 corridor,” Adamec said, but extends to the rural areas of the state.