By Michael Phillips | MDBayNews
The county leaders who testified at Monday’s revenue task force hearing were asking the state for something they generally cannot grant themselves: new or expanded taxing authority. Under Maryland law, local governments are not sovereign. Whatever power they have to tax comes from the General Assembly, and any tax outside that grant requires Annapolis to act first.
That legal backdrop, laid out by the Department of Legislative Services in its own July 31 presentation to the Task Force to Modernize County and Municipal Revenue Structures, is easy to lose in a debate that often sounds like ordinary budget politics. DLS’s presentation opens with what it calls “first principles”: the state has the inherent power to tax as an aspect of its sovereignty, local governments are not sovereign, and they may tax only if the General Assembly authorizes it.
That does not mean counties are starting from zero. State law already requires every county and Baltimore City to levy a property tax and an income tax, the latter set somewhere between 2.25% and 3.3%, and county governments set the exact rate within that band on their own, without going back to Annapolis each time. The rules also are not uniform. DLS’s presentation notes that Baltimore City and Baltimore and Montgomery counties have been granted broader authority through public local laws allowing them to tax “to the same extent as the State,” with specific exceptions such as motor fuel, insurance and estate taxes. Charter counties, code counties and commission counties each operate under a different statutory framework for anything beyond that baseline. What county officials were asking for Monday, in other words, is not the power to tax at all. It is the power to reach new bases, like sales activity or land value, that the General Assembly has not yet opened up to them.
“What county officials were asking for Monday is not the power to tax at all. It is the power to reach new bases that the General Assembly has not yet opened up to them.”
MML says the municipal framework is still rooted in 1967
Maryland’s local governments have been making versions of this argument for a long time. The Maryland Municipal League told the House Ways and Means Committee in February testimony that the state’s local revenue structure has not seen a meaningful update since 1967, when local governments were first allowed to “piggyback” onto the state income tax. Property taxes, MML told lawmakers, now make up roughly half of the average municipal general fund budget. That testimony describes MML as representing 161 municipal governments, a figure that appears to combine the state’s 157 incorporated municipalities with several special taxing districts; MML’s other materials more often cite the narrower 157 figure.
Advocacy resolutions passed by member towns, including Rockville and Berlin, cite another statistic from MML: Maryland is one of only six states that does not share sales and use tax revenue with local governments or let them collect it themselves. MDBayNews has not independently verified that count against other states’ tax codes, and it originates with the bill’s own advocates rather than a neutral fiscal research body.
Not entirely separate visions
The task force’s enabling legislation, House Bill 1142, is deliberately broad. It requires the panel to study current and optional local revenue sources, other states’ practices, and the effect of any new local taxes on affordability, and to make recommendations on local taxing authority by Dec. 1.
Written testimony on the bill shows at least one coalition partner framing “modernization” in more explicitly redistributive terms than most counties did Monday. The Maryland State Education Association, which represents 76,000 educators, testified in support of the task force while asking that its work include evaluating “progressive tax structures” aimed at, in the union’s words, “large corporations, high-income earners, and owners of multiple residential properties.” But that position is not as far from Monday’s county testimony as it might sound. Montgomery County Executive Marc Elrich and Anne Arundel County Executive Steuart Pittman both pushed for more progressive local income tax authority, and Pittman pointed to his own county’s use of existing bracket flexibility to cut rates on income under $50,000 while raising them on its top 2% of earners. The more consistent theme among counties Monday was not opposition to taxing higher earners or businesses. It was a demand that any new authority go toward locally chosen priorities, not toward covering costs the state itself shifted downward.
“The more consistent theme among counties Monday was not opposition to taxing higher earners or businesses. It was a demand that any new authority go toward locally chosen priorities.”
A vote that broke largely along party line
HB 1142 passed the House and Senate this year and was signed into law by Gov. Wes Moore, taking effect July 1. It did not pass unanimously. The House approved it 106-27, and the Senate followed 34-10, according to the General Assembly’s official roll call records. In the House, every no vote came from a Republican delegate, while at least one Republican, Eastern Shore Del. Jeffrie Ghrist, crossed over to vote yes. That split cuts against the wall-to-wall local government support reflected in the town and county resolutions that piled up in Annapolis this spring, and suggests some skepticism in the Republican caucus about opening the door to new local taxing power, even in study form.
“The House approved it 106-27 and the Senate followed 34-10.”
What to Watch
“Counties can already tax within the bounds Annapolis has set. Anything beyond those bounds still requires the General Assembly to move the line.”
The task force’s Dec. 1 report will land just before the 2027 General Assembly convenes. The live question is less whether Maryland’s local revenue system should change than what new authority local governments should get, and over what tax bases. Monday’s testimony put a range of options on the table, from local sales taxes to land value taxation to differential commercial property rates, and not every county wants the same ones. Whatever the task force recommends, the legal starting point stays the one DLS laid out in July: counties can already tax within the bounds Annapolis has set. Anything beyond those bounds still requires the General Assembly to move the line.
Sources: This article draws on the Department of Legislative Services’ July 31, 2026, presentations “Local Taxing Authority and Revenue Sources” and “Structure of Maryland Local Government” to the Task Force to Modernize County and Municipal Revenue Structures; written and oral testimony filed on House Bill 1142 with the House Ways and Means Committee and Senate Budget and Taxation Committee during the 2026 General Assembly session, including testimony from the Maryland Municipal League, the Maryland Association of Counties and the Maryland State Education Association; municipal resolutions from the cities of Rockville and Berlin; and the Maryland General Assembly’s official House and Senate roll call votes and bill history for HB 1142 (Chapter 17, Acts of 2026). This piece is a companion to MDBayNews’ Sept. 14, 2026, coverage of the task force’s public hearing.
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