ROCKVILLE – With the 2016 legislature well underway, the mayor and City Council are asking the General Assembly to begin sending more highway user revenue back to Montgomery County and, ultimately, the city.
Mayor Bridget Donnell Newton and Council member Mark Pierzchala both mentioned reimbursement as a key part of recovering tens of millions of dollars in state reimbursement cuts to localities over the last nine years.
“So I think it’s very doable (for) all municipalities in the state to get the beginning of full restoration of highway user revenue funding,” said Newton, describing it as a potential five-year process.
According to Newton, recovering that money is the “number-one priority” for the Maryland Municipal League. Newton is the chairman of the MML’s legislative committee.
In his proposed Fiscal Year 2017 budget, Gov. Larry Hogan (R) included $231 million in highway user revenues, an increase of 18.9 percent from FY 2016.
That money includes $54 million in additional capital grants to local jurisdictions intended for road improvements and transportation facilities.
However, that is money intended for municipalities across Maryland, which means Montgomery County will receive only a fraction of that total.
“We’ll get whatever the share is whenever they break down the formula,” said Newton, adding the Hogan administration has not yet provided her with those numbers.
In FY ’16, Montgomery County received $4.72 million in highway user revenue, down from $45.3 million in FY ’07.
An 18 percent increase would put the County’s share at $5.57 million for FY ’17, which is still nearly $40 million less than the reimbursement rate from 10 years ago.
Pierzchala explained the highway user revenue is meant of municipalities like Rockville and counties.
“It’s basically a payment for maintaining roads that the state doesn’t have to maintain,” he said.
While the idea of restoring the cut money is routinely mentioned at the beginning of each budgeting session, “it’s a matter of whether the state can afford that,” said Pierzchala.
“They can’t afford to restore that all at one time, which is too bad for us,” he added, noting the city is “on board with the Maryland Municipal League.”
“I think the state’s not providing what it should and what has historically been provided,” he said.
Rockville does generate some of its own highway user revenue through penalties from red-light cameras and speed cameras, with money from one funding safety programs and the other padding the city’s general fund.
Pierzchala noted those programs “initially raised a lot of money” for the city “before people got used to them,” so council members and city staff “don’t count on those programs increasing revenues anymore.”
“One doesn’t really help us that much financially, and the other one does. And I’m not going to pretend it doesn’t. But that’s not the main reason for them. The main reason is safety.”
City officials are also counting on money coming in from the county to offset what Pierzchala described as a duplication of services such as the city providing its own police force.
“I personally feel that the County is stonewalling the municipalities,” he said, noting the county officials have their own budget problems this year.
Meanwhile, as the City Council crafts its FY ’17 budget, council members are preparing for two major financial hits to the city, the totality of which is still unknown.
Both involve the state comptroller’s office.
One is based on a state-based computation error regarding income tax revenue distribution. The other is the U.S. Supreme Court’s ruling in the Comptroller of the Treasury of Maryland vs. Wynne case.
The Supreme Court considered arguments about why residents who pay income tax to another jurisdiction for income earned in that other jurisdiction are allowed a credit against the state tax but not the county tax.
A 5-4 majority of the court ruled Maryland’s personal income tax system violated the dormant Commerce Clause.
“We don’t know yet what the Wynne decision will do to us,” said Newton, adding the same applies for the comptroller’s computation error.
City officials are not likely to receive financial relief from the state as a result of the Wynne decision.
“I’m more concerned about the $200 million taken out of the pockets of taxpayers than I am the $200 million taken out of government,” Hogan said at a Jan. 12 news conference.
Stacey Webster, who serves as the deputy director of finance for the city, told the council members at their first budget work session earlier this month that the city is “probably going to take at least a couple-hundred-thousand-dollar hit a year” from both decisions.
“Probably more concerning to Rockville is misallocation of income tax based on some mistakes by the comptroller’s office,” said Pierzchala. “And here, the issue is that municipalities probably got too much money from income tax at the expense of the county and the municipalities will probably have to reimburse the state.”