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3823
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MARVIN MANDEL, Governor
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Senate Bill 621 further amends section 14(b) of
Article 81, for the purpose of authorizing the counties
and Baltimore City to increase the allowance for
inflation applicable to assessments for local taxation
over the current 50% rate. However, a drafting error has
created a problem of how this section would be
interpreted, which would conceivably have a significant
negative impact upon the tax bases of the State and its
subdivisions, as well as to provide a substantial
unintended benefit to the railroads and public utilities.
Currently, section 14(b)(2) provides that all
assessable personal property shall be assessed at its
full cash value, defined as current value without any
allowance for inflation. This is in contrast to the
situation with respect to real property which, under
§14(b)(1), is to be assessed at current value less an
allowance for inflation, now set at 50%. Section
14(b)(3), which deals with the assessment of the
operating property of railroads, public utilities, and
contract carriers, and shares of stock of domestic
corporations whose shares are subject to taxation,
provides that the personal property of this class of
taxpayer "shall be assessed in accordance with the
provisions of paragraph (3) hereof"-—i.e., at 100% of
current value and without an allowance for inflation.
In amending §14(b), the General Assembly added two
new paragraphs, as paragraphs (2) and (3), and renumbered
existing paragraphs (2) and (3) to become paragraphs (4)
and (5). New paragraph (2) provides that, "for the
purposes of State taxation and for all equalization and
other formulas for the distribution of State aid to the
[subdivisions], the allowance for inflation shall be 50
percent of the current value." With this amendment,
however, the General Assembly failed to amend current
paragraph (3), renumbered as paragraph (5), to change the
reference therein from paragraph (2) to paragraph (4).
This apparent oversight raises the question of
whether the personal property of the aforementioned class
of taxpayers, the full cash value of which was
$1,727,075,000 for FY 1978, will continue to be assessed
at 100% of its current value, or only 50% of that value;
and, if the latter, whether that reduction in assessment
would apply to local taxation as well as State taxation.
The Attorney General has advised me that this omission is
"a serious legal defect" that would, in all likelihood
affect the assessment of that property. He further
concluded, that Senate Bill 621, if signed into law,
"could result in any or all of the following
situations: (1) that foreign utilities would receive
50% allowance for State tax purposes on their
personal property; (2) that foreign utilities would
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