Prince George’s County has lost more than $100 million in state education aid because of a flaw in the Maryland tax formula, but county officials will have to wait another year before state lawmakers fix it.
Lawmakers say they struck a deal with Gov. Martin O’Malley to delay until next year a legislative fix to the state’s net taxable income calculations, a statistic Maryland uses to determine how much money local jurisdictions receive in state education aid.
Prince George’s officials estimate the county has lost more than $100 million in aid over the last six years because of exactly when the state calculates net taxable income.
Del. Jolene Ivey, D-Prince George’s, said county lawmakers are disappointed in the delay but happy to hear the deal will be completed next year.
“We’re certainly not happy about it, but we’re practical and [we trust our governor] will keep his commitment,” Ivey said.
A spokeswoman for O’Malley declined to comment.
The state currently calculates net taxable income for each county before the last federal deadline to file income taxes, Oct. 15. And because late filers tend to be wealthier, the state’s formulas are missing a chunk of the tax revenues from wealthy Marylanders.
As a result, less wealthy jurisdictions like Prince George’s appear richer than they really are, according to county officials.
The opposite is true of the state’s wealthier jurisdictions — Montgomery County looks less wealthy by the state’s calculations than it really is. Prince George’s County Council Chairwoman Andrea Harrison, D-Bladensburg, said, “it really is only fair” that the formula be corrected.
Prince George’s would get an additional $13.3 million in education funding in fiscal 2016 once the changes take place.
“To do anything less would be an unreasonable and unwarranted affront on our ongoing commitment to preserving and sustaining quality public education,” the council wrote in a letter it plans to send to O’Malley, Senate President Thomas V. Mike Miller Jr. and House Speaker Michael Busch.
But Montgomery would see its education aid drop if the date were changed, losing more than $25 million in aid in fiscal 2016, according to state analysts.
The state wants to increase education aid to Montgomery to offset funding lost by the formula. But given the state’s budget woes, lawmakers will wait until next year.
“It’s because it does cost money,” Ivey said. “We’re raising income taxes, and it doesn’t seem like such a great idea to raise taxes but still increase the amount of revenue we need at the same time.”
