Commercial Broker Quarterly: Spring 2002 - GWCAR, Greater Washington Commercial Association of REALTORS(R)

CBQ >> Spring 2003 Issue

Maryland 2003 Legislative Summary

by Meredith R. Weisel, Esquire
Vice President of Public Policy/Maryland & Legal Counsel

At the stroke of midnight on April 8 ("Sine Die") the 2003 Maryland Legislative session closed. It was a bumpy ride for all given the state's dire fiscal situation, a new governor and 47 of 188 of the legislators new to Annapolis.

By mid-session everyone focused on how to balance the state's budget - Slots v. no slots, taxes v. no taxes, cuts v. no cuts - take your pick. Everything was on the table and everyone had an opinion on how it should be done. Nevertheless, in the final hours of the night on Sine Die, the General Assembly managed to balance the budget, absent slots, but in its place a tax package bill that increases taxes targeted mainly towards the business community. Thankfully, Governor Robert Ehrlich vetoed the tax bill package in May.

GWCAR worked closely with the Maryland Association of REALTORS^® to oppose any legislation that would hurt the real estate industry. Specifically, GWCAR submitted written testimony on HB19/SB120 - Recordation and Transfer Taxes - Transfers of Controlling Interests, which would have imposed recordation and transfer taxes on the transfer of controlling interests in certain business entities owning interests in real property in Maryland. GWCAR opposed this legislation because the proposed changes in this bill would considerably alter the fundamental purpose of the recordation and transfer tax laws.

These taxes are required only when a document of certain assets must be recorded in the public record, which in turn provides notice of possession of these assets. Yet, HB19/SB120 would have made the transfer of intangible assets be subject to a recordation and transfer tax, even though there is no need to record it.

Further, Maryland's recordation and transfer taxes were established to tax the recording of the document, not the specific transfer. GWCAR was concerned that since it is not mandatory that the controlling interests of a business entity be recorded, there will be no way to track these transfers. Some real estate transactions will lawfully pay these taxes while others will not. The good news is that the bill never made it out of a committee.

Also, a significant breakthrough that hits home the most in the DC metro area is the Federal Government's commitment to put the InterCounty Connector's study on a fast track.

Montgomery County Budget Crisis

The budget continues to be the focal point in Montgomery County these days. County Executive Douglas Duncan presented his Fiscal Year 2004 budget to the County Council in March and now the council has been dissecting it piece by piece. The month of April was dedicated to holding budget hearings on the different pieces of the pie. Although the council has expressed many ideas on ways to balance the county budget, a lot depends on what the final outcomes are at the state level.

GWCAR has remained adamantly opposed to the executive's proposed 3-cent increase in the Property Tax, given the rising assessments throughout Montgomery County.

Second, GWCAR staff has also expressed its concern to both the executive and several councilmembers regarding Duncan's proposal to take the recordation tax increase from last year and put it back into the general fund instead of keeping it dedicated for schools as was proposed last year.

Look for "Government Affairs Update" e-mails for further developments.