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Relief ahead on personal property tax?

ANNAPOLIS — The Maryland Association of Counties is trying to change the way the personal property tax — the levy that businesses pay on items such as furniture and carpeting — is calculated.

Right now, state law mandates that the personal property tax be 2.5 times the tax rate for real property. That means every time a local government raises its real estate tax rate, every business in that jurisdiction pays more in personal property tax as well.

Legislation about to be introduced to the General Assembly would change that. The association, whose members represent all 23 counties and Baltimore city, says it has found two lawmakers to sponsor a bill that would remove the requirement from law.

Andrea Mansfield, MACo’s legislative director, said the bill would change language in the law to say that the personal property tax can be “no more than 2.5 times” greater than the real estate tax, allowing local jurisdictions to set a lower rate.

Mansfield said counties facing revenue shortfalls after the recession and the housing crisis — which lowered local tax bases — have felt pressure to increase real estate taxes in recent years. Raising them, however, currently hits businesses with an increase in the personal property tax as well.

Gov. Martin O’Malley and the legislature decided last year to shift some cost of teacher pensions to local jurisdictions, exacerbating some counties’ budget problems. “I think the pension shift put some more pressure on,” Mansfield said.

Wicomico County Executive Richard M. Pollitt Jr., MACo’s president, said a lockstep increase in the personal property tax runs counter to promoting economic growth, as businesses find less money in their budgets for retaining employees or hiring more.

That’s why Sen. James N. Robey, a Howard County Democrat who served two terms as county executive, signed on to sponsor the bill. Robey said the legislation was still being drafted, but once it was completed, he would seek co-sponsors in the Senate.

“Being a former county executive, they thought I might be sympathetic,” Robey said. He added that the bill would be prospective, not retroactive, so there would be no immediate fiscal impact on the state’s coffers.

William R. Burns, a spokesman for the Maryland Chamber of Commerce, said the pro-business organization had not yet decided whether it would take an official position on the proposed legislation, because it had not yet been drafted and formally introduced. But Burns said the chamber would be supportive of the concept.

Mansfield said Del. Sheila E. Hixson, a Montgomery County Democrat who chairs the Ways and Means Committee, had shown interest in sponsoring the bill in the House of Delegates. Hixson was not immediately available to comment on the bill.

Personal property tax rates became a subject of debate last year. During the General Assembly’s special session in August, legislation was passed to exempt casinos from paying personal property taxes. Maryland’s casinos are already subject to a 67 percent tax on their slots revenue, but that rate will decrease over the next several years.