BRIAN E. FROSH

ATTORNEY GENERAL

ELIZABETH F. HARRIS CHIEF DEPUTY AlTORN"EY GENERAL

TH1.RUVENORAN VIGNARAJAH DEPUTY ATTORNEY GENeRAL

THE ATTORNEY GENERAL OF MARYLAND OFFICE OF COUNSEL TO THE GENERAL ASSEMBLY

April 1,2015

The Honorable Jay Walker Chair, Prince George's County Delegation Maryland General Assembly 207 House Office Building Annapolis, Maryland 21401

Dear Delegate Walker:

SANDRA BENSON BRANTLEY

COUNSEL TO THE GENERAL ASSEMBLY

KATHR.YN M. ROWE. DEPUTY COUNSEL

JEREMY M. McCoy ASS ISTANT ATTORNEY GIiNERAL

DAVID W. STAMPER ASSISTANT ATTORNEY GENER.AL

You asked for advice on behalf of the Prince George's County Delegation relating to a proposal to raise the property tax, the telecommunications tax, and other personal taxes. County leaders have publicly stated that the increases are targeted to fund the county's education budget. Moreover, you indicated that the County Executive stated that the increases can be made without application of the Tax Reform Initiative by Marylanders ("TRIM"), adopted in 1978 and ratified again in 1996. As explained below, the County Executive is correct.

In 1978, Prince George's County adopted Charter Section 812, which provided that a real property tax may not be levied in the County that would result in real property tax revenues greater than those collected in Fiscal Year 1979. Section 812(a)(1) . This amendment is known as the TRIM Amendment. The limitation was subsequently amended to authorize the Council to "levy a real property tax which would result in a total collection of real property taxes greater than the amount collected in fiscal year 1979 if the real property tax rate does not exceed Two Dollars and forty cents ($2.40) for each One Hundred Dollars ($100.00) of assessed value." Section 812(a)(2). Another charter amendment was approved by County voters in 1996, Section 813. That provision provides, in part, that "the County Council shall refer to a referendum of the qualified voters of the County ... any ordinance or resolution levying or charging the amount of any tax or fee in excess of the amount levied or charged in the preceding fiscal year." Section 813(a).

Question 1.' "Whether the General Assembly's authorization in the State Annotated Code that fJllows the Prince George's County Council to levy and modify the levy of a telecommunications tax authorization supercedes the County Charier requirement that such taxes must be approved by voter referendum?"

Answer: Yes. The Office of Attorney General has consistently advised that the referendum requirement and other charter limitations on the power of a county council to impose taxes does not apply when the council is acting pursuant to an authorization in a public general law enacted by the General Assembly. See, e.g., 64 Op. Att'y Gen. 35 (197g)(concluding that the TRIM

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The Honorable Jay Walker April 1; 2015 Page 2

Amendment did not apply to property taxes required by public general law for the support of the Maryland National Capital Park and Planning Commission and the Washington Suburban Sanitary Commission because under Maryland Constitution Art. XI-A, 3, the legislative authority of the County is subject to the Constitution and public general laws of the State): Letter of Advice to the Honorable Marvin H. Smith from Ass!. AII'y Gen. Richard E. Israel, dated November 22, 1995 (advising that public general law which allowed the county governing body to set the income tax rate to between 20% and 60% precluded the application of any county limitations or referendum requirements): Letter to Dereck E. Davis from Ass!' AII'y Gen. Kathryn M. Rowe, dated May 22, 2007 (advising that charter referendum requirement does not apply when council raised taxes pursuant to authorization in public general law). See also Maryland Constitution Art. XI-A, 1 (charter provisions are "subject only to the Constitution and Public General Laws of this State").

Local Government Article ("LG") 20-605(c) states that "[blY ordinance, the County Council for Prince George's County shall impose a sales and use tax on telecommunications service in Prince George's County at a rate not less than 5%." That section further requires that at least 90% of the net proceeds from the tax be used for operating expenditures of the Prince George's County school system and the remainder for payment of debt service on bonds issued by Prince George's County for school renovation projects approved by the Prince George's County Board of Education and Prince George's County. LG 20-605(e). Education funding requirements are mailers of public general law, even when enacted to apply to a single county. 79 Op. Att'y Gen. 132, 134 (1994). Thus, a county ordinance raising the telecommunications tax enacted pursuant to LG 20-605(c) is not subject to the County's referendum requirements of the County Charter.

Questions: 'Whether Senate Bill 848 of 2012 granted the authority to the governing body of Prince George's County to first increase property tax rates above the levels allowed by the County Charter? If such authority extends to allow increases above the levels needed to fund the Maintenance of Effort requirements for the County, and if the authority is granted, by what legislative mechanism does Senate Biff 848 allow the governing body to exercise this authOrity?"

Chapter 6, Laws of Maryland 2012 (Senate Bill 848) made several changes to the local maintenance of effort ("MOE') requirements for education funding. Among the changes were provisions providing that:

(1) Notwithstanding any provision of a county charter that places a limit on that county's property tax rate or revenues and subject to paragraph (2) of this subsection, a county governing body may set a property tax rate that is higher than the rate authorized under the county's charter or collect more property tax revenues than the revenues authorized under the county's charter for the sole purpose of funding the approved budget of the county board.

(2) If the county governing body sets a county property tax rate that is greater than the rate authorized under the county's charter or collects more property tax revenues than the revenues authorized under the county's charter, the county:

The Honorable Jay Walker April 1, 2015 Page 3

(i) May not reduce funding provided to the county board from any other local revenue source below the fund ing level in the current county budget; and

(ii) Shall appropriate to the county board all property tax revenues exceeding the amount that would have been available if the county charter limitation had applied.

Education Article ("ED"), 5-104(d).

Chapter 6 of 2012 is a public general law. Under Article XI-A, 1, tax cap charter prOVisions, "like any other charter provisions, are subject to the 'Public General Laws of this State.' ... So, too, by enactment of a general law, the Legislature could override existing tax cap provisions in county charters ... It is clear that the State's laws on public schools are public general laws." 79 Op. Att'y Gen. 132, 133 (1994). Accordingly, as provided in ED 5-104(d), Prince George's County may raise property taxes for the sole purpose of funding education despite limitations in the TRIM Amendment or the requirement of approval by voter referendum. The increased rate is limited to an amount needed "for the sole purpose of funding the approved budget of the county board." Moreover, ED 5-104(d)(2)(i) provides that the new revenues from the increased property tax rate must supplement other revenue sources in the current budget, not supplant them .

According to the County, the Prince George's Board of Education has requested $1,930,930,600, of which $763,209,640 is to come from County resources' So long as the County shows that the ex1ra revenue from the increased tax rate is needed to fund the approved budget for the school board and that the funds are in addition to other revenue sources in the current budget, the County is in compliance with the law. I am aware of no other "legislative mechanism" required to pass the tax provisions authorized under State law other than the mechanism provided to the Council in its Charter to enact ordinary legislation.

Sincerely,

(- l[.~\ ((;/ ~kl )CIV- {, Sandra Benson Brantley Counsel to the General Assembly

1 http://www.princegeorgescountymd.gov/sitesiCountyCounciIiResources/BudgeUPages/default.aspx. Note that according to the budget request document. the County share assumes the education reductions in the Governor's FY16 budget are not restored .

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PRINCE GEORGE'S COUNTY DELEGATION

April 7, 2015

Office of the Attorney General

Legislative Services Building

Annapolis, MD 21401

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On behalf of the Prince George's County Delegation, I am writing to ask the Attorney General's Office to provide an advisory opinion on an uncertainty among the elected representatives of the county on a matter of local and state law.

The questions pertains to the authority cited in discussions of the proposed Prince George's County Fiscal Year 2016 Budget, which contains a 1S-cent increase on the property tax rate and other increases targeted to fund county education priorities . The increases include the telecommunications tax, as well as personal and property taxes.

At a meeting between County Executive Rushern L. Baker III and the Prince George's County House Delegation on Friday, March 27, several elected leaders asked the how the proposed budget can make the proposed increases without requiring voter referendum approval, a measure imposed by Charter amendment in 1978.

In response, the County Executive cited state legislative authority granted in 2012 through Senate Bill 848 - Education - Maintenance of Effort, which he said specifically allows counties to bypass charter restrictions if the money is spent on education.

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(We have attached a copy of SB 848 as cited by the executive. The language in question is located on Page 4, Section D. 1-3.)

In addition to questions from the delegates, the Prince George's County Council has asked in writing to seek specific clarifications from the Attorney General in this matter, specifically:

1. Whether the General Assembly's authorization in the State Annotated Code that allows the Prince George's County Council to levy and modify the levy of a telecommunicotions tax authorization by ordinance supersedes the County Charter requirement that such taxes must be approved by voter referendum;

2. Whether Senate Bill 848 of 2012 granted the authority to the governing body of Prince George's County to first increase property tax rates above the levels aI/owed by the County Charter, and:

3. If such authority extends to aI/ow increases above the levels needed to fund the Maintenance of Effort requirements for the County, ond,

4. If the authority is granted, by what legislative mechanism does Senate Bill 848 aI/ow the governing body to exercise this authority?

On behalf of the 23 delegates in the county delegation, I formally request the Office of the Attorney General to make an expedited review of these issues and please issue an advisory opinion as soon as possible to our office.

Please contact our staff at 410-841-3074 if we can be of any assistance or provide any clarification, and thank you for your time and attention to this matter.

Sincerely,

Delegate Jay Walker Chair, Prince George's

House Delegation