Baltimore Mayor Martin O'Malley, Montgomery County Executive Douglas M. Duncan and other local leaders joined together yesterday in support of a plan to raise money for school construction by shutting a corporate real estate tax loophole.
The proposal, a top priority of House Speaker Michael E. Busch, would charge corporations county recordation fees and state transfer taxes that they can now avoid if they purchase a "controlling interest" in a company that owns real estate. Under current law, the taxes don't apply if the title to the buildings and land never changes hands, even if the company that owns them is sold.
The money would be dedicated to classroom construction and renovation. State funds for school construction have been shrinking in recent years, dropping from an average of $250 million yearly between 1999 and 2002 to $100 million in the governor's proposed budget for 2005.
A state task force recently completed a study that found $2.85 billion in school construction needs over the next eight years.
"The folks that are really well off should pay their fair share," said Prince George's County Executive Jack B. Johnson, who joined O'Malley, Duncan and others at a State House news conference.
County leaders say they lose millions of dollars a year from real estate transactions. O'Malley noted that a company that recently purchased a $137 million building in Baltimore paid no taxes.
Legislative analysts estimate that closing the real estate tax loophole would generate about $13 million yearly for the state and $43 million for localities.
The measure is opposed by the Maryland Chamber of Commerce, among others.