Measuring Maryland's Progress

 

 

Local governments in Maryland are responsible for funding, with their own-source revenues, approximately 35% of government services that are budgeted at the State and local level.  The reliance on local own-source revenues varies among jurisdictions, reflecting the differences in the revenue raising abilities of local governments, as well as varying sets of services provided at the local level.  To compensate for the lower tax bases in certain jurisdictions, the State has established numerous aid programs that provide a significant amount of funding to local governments.  The local government data dashboards utilize several indicators to measure the fiscal condition of local governments.  Key indicators include local revenue sources, local revenue growth, county assessable base trends, general fund balances, State aid trends, and local wealth measures.  The following points summarize key findings with respect to local government finances and State aid.

 

 

LOCAL GOVERNMENT FINANCES AND STATE AID

 

Updated

Local Government Revenues – Local Tax Revenue

 

Baltimore City and county revenues totaled $28.7 billion in fiscal 2014. Local taxes accounted for 47.2% of total revenues, whereas State and federal grants accounted for 33.3%.  Currently, local governments are experiencing modest growth in local tax revenues.  Between fiscal 2015 and 2017, local tax revenues have increased at an average annual rate of 3.8% with total general fund revenues increasing by 3.2%.

 

In fiscal 2017, county property tax revenues will total $7.9 billion, representing a 3.5% average annual increase over the past two-year period.  Local income tax revenues will total $5.2 billion, representing a 4.1% average annual increase.  Recordation and transfer taxes will total $877.2 million, with recordation taxes increasing by 8.6% and transfer taxes increasing by 5.6%.

 

December 2016

Local Government Revenues – Homestead Tax and Property Tax Revenues  

 

County assessable base is projected to remain relatively stable in fiscal 2016, after several years of declines.  Total real county assessable base decreased by 7.0% in fiscal 2012 and by 1.4% in fiscal 2014.  In fiscal 2015, the real county assessable base increased by 1.2% statewide followed by a 2.9% increase in fiscal 2016.  The real change in the county assessable base after adjusting for the homestead tax credit program ranged from a 2.0% decrease in fiscal 2012 to a 3.1% increase in fiscal 2016.

 

 

 

 

December 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

Local Government Revenues – Income Tax Revenues  

 

Local income tax revenues mirror State collections and have rebounded from a decline that occurred beginning in fiscal 2008 and that lasted through fiscal 2010.  The local income tax represents the third largest revenue source for county governments, accounting for 16.4% of total revenues. 

 

 

 

 

 

 

 

December  2016

Local Government Revenues – Recordation and Transfer Tax Revenues

 

The downward slide in local recordation and transfer tax revenues ended in fiscal 2011.  County governments collected $511.7 million in local recordation and transfer taxes in fiscal 2011 and $765.1 million in fiscal 2015; collections are estimated at $819.5 million and $877.2 million in fiscal 2016 and 2017, respectively.  These amounts are significantly lower than the amounts collected in fiscal 2006 when the soaring real estate market yielded recordation and transfer taxes totaling $1.2 billion.

 

 

 

 

 

December 2016

Local Government Revenues – General Fund Balances

 

Local government general fund balances have started to move upward after several years of declining balances.  County governments ended fiscal 2015 with total unrestricted general fund balances, including rainy day accounts, totaling $2.3 billion.  This amount totaled only $1.7 billion in fiscal 2011 and $2.1 billion in fiscal 2012.  A county’s unrestricted general fund balance as a percent of general fund revenues is one indicator of a county’s fiscal health and a county’s ability to withstand an economic downturn.  In fiscal 2015, unrestricted general fund balance as a percent of general fund revenues averaged 16.4% across county governments.  In fiscal 2015, Wicomico County (37.3%) had the highest unrestricted fund balance ratio in the State followed by its Eastern Shore neighbors Somerset (33.0%) and Talbot (31.7%) counties.  Anne Arundel County (9.4%) had the lowest ratio followed by Howard County (10.5%).

 

December 2016

Local Government Revenues – County Debt Measures

 

Maryland counties and Baltimore City had $19.8 billion in outstanding debt as of June 30, 2014.  Between fiscal 2010 and 2014, local debt for counties and Baltimore City increased by $3.7 billion or 22.8%.  This represents a 5.3% average annual increase over the four-year period.  Baltimore City (9.3%) had the highest debt to assessable base ratio in fiscal 2014 followed by Baltimore (3.8%), Prince George’s (3.4%), and Howard (3.2%) counties.  The high ratio in Baltimore City can be attributed to slower-than-average assessable base growth and debt for financing urban renewal and development projects, transportation projects, water projects, and wastewater facilities.  Talbot County (0.5%) had the lowest debt to assessable base ratio in fiscal 2014, followed by Dorchester (0.9%), Garrett (0.9%), and Worcester (0.9%) counties. For comparative purposes, in fiscal 2014 the State had a debt-to-assessable-base ratio of 2.9% that increased from 2.8% in 2004.  The municipalities/special taxing districts had a ratio of 1.2% in 2014.

 

December 2016

State Aid to Local Governments  – Funding Trend and Per Capita Allocation 

 

 

State aid to local governments will total $7.4 billion in fiscal 2017.  Of this amount, direct aid to local governments will total $6.5 billion, and retirement payments made on behalf of local governments will total $834.4 million.  Nearly 70% of State aid is distributed inversely to local wealth.  Also, a large portion of State aid to local school systems is distributed on a per pupil basis.  Therefore, differences in local wealth and in the ratio of school-aged individuals to total county population result in considerable variation in per capita State aid across Maryland counties, including Baltimore City.

 

 

December 2016

State Aid to Local Governments – State Aid to County and Municipal Governments  

 

Along with disparity grants and public safety aid, transportation aid continues to be a large portion of State aid to county and municipal governments, though the portion of highway user revenues going to local governments is well below historical levels.  Grant funding to local governments intended to cover the impact of casinos in Maryland began in fiscal 2011 and continues to grow as additional casinos have opened in the State.

 

Per capita aid to county and municipal government ranges from $26 to over $400 in fiscal 2017.  Much of the variance among counties is due to the targeting of public safety and disparity grant aid and the large portion of highway user revenues going to Baltimore City.

 

 

December 2016

State Aid to Local Governments – State Aid to Public Schools

 

The majority of State aid benefiting local school systems is distributed inversely to local wealth.  As a result, counties with relatively low wealth per pupil receive relatively high amounts of State aid per pupil.

 

 

 

 

 

 

 

 

December 2016

State Aid to Local Governments – State Aid Share of State Budget and Share of State Expenditures     

 

State aid to local governments accounts for a substantial share of the State budget, representing over 25% of total State funds and nearly 40% of general funds.

 

 

 

 

 

 

 

 

 

December 2016

 

 

 

 

This page revised December 7, 2016