The Montgomery County Council on Tuesday passed a bill that proponents say will create jobs but critics fear will take away much-needed funding from schools and roads. Co-sponsored by seven council members, the bill allows developers to wait to pay taxes until they have completed their projects.
“It’s very difficult for investors to put money towards projects when they’re having to use their investment capital to pay taxes up front,” said Councilman Hans Riemer, D-at large, who introduced the bill.
The measure will make Montgomery County more competitive for businesses, said Councilman Roger Berliner, D-Bethesda. He pointed to Virginia, where a similar policy exists.
By stimulating development, it will create jobs, said Councilwoman Nancy Floreen, D-at large. “It’s useful to think about how far we go to help the goose that’s laying the golden egg in Montgomery County.”
But the taxes pay for school and road construction, critics say, so delaying the tax payments could delay some long-awaited projects, like the Clarksburg Cluster elementary school, additions to Whetstone and Bradley Hills elementary schools, the Chapman Avenue extension and Montrose Parkway East.
As much as $20 million could be pushed off from the county’s current six-year construction budget into later years, said Deputy Council Staff Director Glenn Orlin, potentially affecting any project that is not fully funded.
The restrictions the bill will place on the county’s cash flow will be particularly hard to bear now because the county is trying to reduce its debt obligations, County Executive Ike Leggett said in a memo to the council on Oct. 17. If council members don’t want to delay projects directly affected, they will have to take funding from other projects to fill the gap the delayed taxes create.
The effect would be particularly tough for the growing school system, school board President Christopher Barclay said in a recent letter to the council. Superintendent Joshua Starr has requested a 9 percent increase in the school’s construction budget for school modernizations and expansions.
Leggett suggested expiring the bill after two years, which would shorten the delay of the estimated $20 million in revenue, and the council’s Government Operations and Fiscal Policy Committee suggested a five-year expiration date, which would have had a similar effect. But in a 5-4 vote, the council opted not to have the bill expire.
The council passed the full measure 8-1, with Councilman Phil Andrews, D-Rockville/Gaithersburg, voting against.
