County Codifies Improved Municipal Tax Reimbursement Process with Phase-In of Higher Takoma Park Payment

By Sean Gossard

On Monday, March 14, 2022 Montgomery County Executive Marc Elrich signed Bill 2-22, which will reimburse incorporated cities and towns—including Takoma Park—for duplicate taxes for services like local police enforcement, crossing guards, and park and road upkeep according to agreed upon formulas.

“The codification of municipal tax duplication formulas is a long overdue request from our municipalities,” Elrich said in a statement. “This reimbursement program addresses the issue of property tax duplication since both the County and the municipality levy a property tax, but only the municipality provides that service within its jurisdiction.”

Municipalities and the County’s Chapter of the Maryland Municipal League have pushed for revisions to the tax duplication legislation going back to the 1970s and the changes in Bill 2-22 come as a major relief for city leaders. “It’s been a really longtime coming,” said Deputy City Manager Jessica Clarke, who helped negotiate with County and other municipal leaders for over six months to ensure feedback from municipalities was fairly incorporated into the bill. “It’s nice to reach an agreement with the county knowing that it’s a stable revenue source for the foreseeable future.”

Previously, the City would need to renegotiate the reimbursement every year with plenty of time-consuming back and forth between City and county officials. While the county would occasionally reimburse the municipalities for services, the total amounts would need to be renegotiated every year. “Every year we weren’t sure when the county would give us the money and weren’t sure what the amount would be,” Clarke said. “It felt like a political process each time. Now it’s all
in the code.”

Bill 2-22 formalizes that Montgomery County owes a certain amount every year for certain services, which is an incredibly significant step, according to former Takoma Park City Manager Suzanne Ludlow, who had been pushing the passage of the legislation since the late 1990s.

“There’s been two issues,” Ludlow said. “One is that the county never liked paying the money and wanted to spend that money somewhere else, and two, the county didn’t really see it as an amount that was owed. How much of that and how much they owed was a topic of conversation every year. There had been formulas years ago from the economic crash from 2008 to 2012 and trying to get that back has been a particular challenge.”

Over the years, the amount the county would reimburse had remained stagnant and had not kept up with inflation or the growing budget of the city’s police force. “The bill that just passed also codifies quadrennial reassessments, so the fact that we now have a formal codified process for tax duplication and a timeline for when reimbursement activities need to happen each year is a significant improvement to the ad hoc processes of the past,” Clarke said.

In all, the bill will double the County’s reimbursement for municipally delivered services from $10.1 million for Fiscal Year 2022 to $20.5 million with an 80 percent phase-in for Fiscal Year 2023, a 90 percent phase-in for Fiscal Year 2024, and a total phase-in for Fiscal Year 2025.

“The phase-in was a compromise we had to make to reach agreement with the County,” Clarke said. “After Fiscal Year 2025, reimbursements must be increased [based on] the annual Consumer Price Index percentage change for the D.C. Metro area.”

Takoma Park itself is expecting to see reimbursements of around $5.3 million for Fiscal Year 2022, with increases over the next few years. That includes a guaranteed minimum of $4,020,521 for the city’s police department. The money goes directly to the City’s General Fund.

It has truly been an effort on multiple fronts, including other municipalities in Montgomery County like Chevy Chase, Gaithersburg, and Rockville, along with plenty of Takoma Park employees and leaders. “I appreciate that over time we’ve really made progress formalizing this process with the municipalities. That’s the hugest step; it’s really phenomenal,” Ludlow said. “The pressure on the county has been consistently coming from the mayors of Takoma Park—including Bruce Williams and Kate Stewart—keeping pressure on the elected officials as something that needs to get done.”

This article was featured in the April 2022 Newsletter. Visit the Takoma Park Newsletter webpage to see full list of past newsletters.