Maryland Delegate Galen Clagett says Frederick County's leaders should consider raising local income taxes to help pay for school construction and other capital projects.
Clagett floated the idea Tuesday afternoon to a work group tasked with discussing county growth planning strategies. The group is looking at how the county should pay for infrastructure expansion to serve the growing population of students, drivers and library patrons.
Frederick County's current income tax rate sits at 2.96 percent, but state law permits local governments to charge up to 3.2 percent, Clagett noted. If Frederick County officials decided to raise the tax, they could dedicate the increase to capital improvements, said Clagett, D-District 3A.
"That's a progressive tax. It hits everybody equally," he told other members of the work group.
By contrast, transfer taxes levied when properties are sold and impact fees charged to developers place the burden of infrastructure funding on select groups, he said.
County Manager Lori Depies, who is heading up the task force, said Clagett's idea had merit and recommended including it in the group's report to county commissioners. However, she asked the rest of the group for feedback, since raising the income tax rates could have significant implications for county residents.
"In a fragile economy, an increase in the income tax rate, what is that going to do to the groups that we represent?" she asked.
Work group member RaeAnn Butler, who is also chairwoman of the Frederick County Commission on Aging, said elderly residents of Frederick County can't afford an increase in income taxes.
During the meeting's public comment portion, Carol Krimm, another member of the Commission on Aging, also voiced concern.
"Any extra taxes on seniors may cause undo hardships for them," said Krimm, also an alderwoman in the city of Frederick.
Clagett said low-income seniors would be exempt from the increase.
Clagett also suggested rerouting recordation tax proceeds so all the money feeds the county's capital budget. Revenue from the recordation tax is currently divided between the general fund, agricultural preservation programs and school construction projects, among other categories. But rather than dedicating revenue streams to certain types of projects, capital funding should flow into one pot to allow greater flexibility during the budgeting process, Clagett argued.
The state delegate acknowledged such a shift in the recordation tax, which brought more than $24.3 million to county coffers in fiscal 2013, couldn't happen overnight.
Darrell Batson, the county's director of public libraries, said lumping all the funding together could leave certain types of projects out in the cold. When there's school crowding or need for additional fire and rescue services, it's hard to make a case for building a new park or library, he said.
"The problem with having a lack of dedicated streams of revenue for some of these, is they get lost when you're taking in the big picture," Batson said.
However, libraries and parks should still rank as a priority, he added.
Clagett agreed and said there would be ways of making sure these types of projects don't get edged out in the capital budgeting process.
Depies said she is starting to draft the work group's recommendations to county commissioners. The group's members do not have an interest in establishing a Frederick County transfer tax to fund infrastructure projects, Depies said.
Follow Bethany Rodgers on Twitter: @BethRodgersFNP.