Was Maryland's long-running Homeowner's Tax Credit, capping assessment jumps above 15%, actually unconstitutional?

Plain-English summary

A member of the Maryland House of Delegates asked the Attorney General whether the office still viewed §9-105 of the Tax-Property Article, a tax credit that shielded homeowners from property tax on the portion of an assessment increase above 15% in a year, as unconstitutional. The credit had originally been enacted in 1977 as a two-year measure to protect homeowners whose assessments were rising much faster than their incomes, but the General Assembly kept extending it, in the 1987 opinion's telling, for eleven straight years by that point.

The Attorney General reaffirmed the office's decade-old view: the credit violates Article 15 of the Maryland Declaration of Rights, which requires taxes to be applied uniformly within each class of property, because it gives the largest tax break to owners of the properties that gained the most value, while owners of stagnant or declining properties paid a comparatively larger share of their property's worth in tax. The opinion traced how earlier Attorneys General had approved the credit as an acceptable temporary departure from strict uniformity, tolerable for a limited run comparable to the five-year cycle upheld for periodic reassessment, but had progressively warned each subsequent extension of the credit made it harder to defend, until by the mid-1980s the office told the Governor it could no longer approve further extensions without a constitutional amendment. Because the General Assembly never proposed or approved such an amendment yet kept renewing the credit anyway, the opinion concluded that what had once been defensible as "temporary" tax relief could no longer be treated that way.

Currency note

This opinion was issued in 1987. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why did Maryland's Attorney General consider a homeowner's property tax credit unconstitutional in 1987 when the same office had approved it back in 1977?
The 1977 version was a two-year measure meant to cushion homeowners from a sudden spike in assessments relative to their incomes, which prior opinions treated as a tolerable, temporary departure from the state constitution's uniform-taxation requirement. By 1987, the General Assembly had renewed the same credit for an eleventh straight year, and the opinion concluded that what started as temporary relief had become a permanent feature that could no longer be excused as an exception to uniformity.

How exactly did this tax credit favor some homeowners over others, according to the opinion?
The credit shielded homeowners from tax on the part of an assessment increase above 15% in a year. A homeowner whose property value jumped sharply got a large tax break relative to their property's true value, while a homeowner whose property value stayed flat or grew slowly paid tax on close to the full assessed value, meaning owners of the least valuable, slowest-growing properties effectively paid a larger share of taxes relative to their property's worth.

Did the Attorney General's office think there was any way to fix the credit and keep it constitutional?
Yes, but only through a constitutional amendment to Article 15's uniformity requirement, or by redesigning the program on a different basis. The opinion's editor's note explains that a 1988 bill revising the credit to be based on homeowner income, rather than simply capping assessment growth for everyone, was viewed by the office as constitutionally defensible in that revised form.

Background and statutory framework

Article 15 of the Maryland Declaration of Rights requires the General Assembly to classify property by uniform rules and requires that taxes on property be "uniform within each class or sub-class." In 1977, at the Governor's request, Attorney General Burch concluded that a straightforward statutory cap on annual assessment increases would violate this uniformity requirement over any significant duration, because it would give the largest relative benefit to owners of rapidly appreciating property while leaving owners of stagnant property to bear a larger share of the tax burden relative to their property's value. That same year, the General Assembly enacted a two-year Homeowner's Tax Credit along these lines, and Attorney General Burch approved it as only a "temporary" and therefore tolerable departure from uniformity, drawing an analogy to the Court of Appeals' approval in Rogan v. Commissioners of Calvert County of a quinquennial, or five-year, assessment cycle.

As the General Assembly kept extending the credit, first for one year, then two more, then repeatedly through the 1980s, successive Attorneys General approved each extension with escalating warnings: by 1980, the office called a sixth-year extension of "doubtful constitutionality" and said it lacked clear authority beyond the five-year period the Rogan case supported; by 1984 and 1985, the office told the Governor it could not approve extensions beyond a tenth year without an amendment to Article 15's Uniformity Clause; and individual attorneys in the office gave the same warning in letters of advice to legislators. Despite these warnings, and despite some legislators' efforts to propose a constitutional amendment, the General Assembly extended the credit again in 1986 without amending the constitution. The 1987 opinion concluded that a program nominally called "temporary" but in fact renewed for more than a decade running could no longer be defended as the kind of brief departure from uniformity that earlier opinions had tolerated, and reaffirmed that TP §9-105 violates Article 15.

Citations

Statutes:

• §9-105 of the Tax-Property Article (Homeowner's Tax Credit for assessment increases above 15%)
• Article 15 of the Maryland Declaration of Rights (uniform taxation requirement)
• Chapter 959 (House Bill 1281), Laws of Maryland 1977 (original two-year Homeowner's Tax Credit)
• Chapter 177 (Senate Bill 543), Laws of Maryland 1978 (first extension)
• Chapter 747 (House Bill 918), Laws of Maryland 1979 (extension for a fourth and fifth year)
• Chapter 858 (House Bill 1049), Laws of Maryland 1980 (sixth-year extension, deemed doubtful)
• Chapter 854 (House Bill 789), Laws of Maryland 1986 (eleventh-year extension)
• Chapter 776 (House Bill 244), Laws of Maryland 1988 (subsequent revision tying the credit to income)

Cases:

• Rogan v. Commissioners of Calvert County, 194 Md. 299, 310-11 (1950)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1987/Volume72_1987.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Taxation—Property Tax—Assessments—Uniformity—Tax Credit In §9-105 Of Tax-Property Article Violates Article 15 Of Declaration Of Rights.

November 11, 1987

The Honorable James W. Campbell
Maryland House of Delegates

You have requested our opinion on the constitutionality of the tax credit set forth in §9-105 of the Tax-Property Article ("TP" Article), which generally provides, "[F]or the taxable years 1986-1987 and 1987-1988," a property tax credit for properties that are assessed at more than 15% of the prior year's assessment. Specifically, you ask whether the Attorney General's Office continues to view TP §9-105 as violative of the uniformity requirement of Article 15 of the Maryland Declaration of Rights.

For the reasons stated below, this office continues to believe that TP §9-105 violates Article 15 of the Declaration of Rights.

I
Property Tax Credits and the Uniformity Requirement

Article 15 of the Declaration of Rights provides, in relevant part, that: "[T]he General Assembly shall, by uniform rules, provide for the separate assessment, classification and subclassification of land, improvements on land and personal property, as it may deem proper; and all taxes thereafter provided to be levied by the State for the support of the general State Government, and by the Counties and by the City of Baltimore for their respective purposes, shall be uniform within each class of sub-class of land, improvements on land and personal property which the respective taxing powers may have directed to be subjected to the tax levy. ..." (Emphasis added).

In February 1977, Attorney General Burch, at the request of the Governor, considered the constitutionality under Article 15 of a host of property tax reform proposals, one of which would have imposed a percentage limitation on the increase in residential assessments from year to year. See 62 Opinions of the Attorney General 54 (1977). Attorney General Burch stated that:

"While this plan would provide some relief to many taxpayers, the greatest relief would be afforded to the taxpayers whose property was increasing in value at the greatest rate. Those owning property in declining areas which either decreases in value, retains the same value or increases in value at an insignificant rate would not benefit from this proposal. Additionally, a percentage limitation would violate the uniformity provision of Article 15 of the Declaration of Rights. For example, certain residential properties might dramatically increase in market value while others remained the same or increased insignificantly. Nevertheless, the assessments of all of these properties would remain within the statutory percentage of the previous year's assessment. A person whose property increased 20% in value would be assessed, because of the limitation, at considerably less than 50% of market value, while a person whose property remained at the same value would be assessed at 50% of market value. Persons with the less valuable properties would pay more than their share of taxes in relation to the value of their property. The result would be an unconstitutional lack of uniformity." 62 Opinions of the Attorney General at 61.

That same year, the General Assembly enacted Chapter 959 (House Bill 1281), Laws of Maryland 1977, which mandated a credit, subject to certain conditions, against county and municipal property taxes for a homeowner whose assessment increased from the prior year by more than 15 percent. This tax relief was expressly limited to a two-year period and, according to the bill's preamble, was aimed at the homeowners "now faced with the financial hardships of assessments which are increasing in a proportion far greater than their incomes." These factors led Attorney General Burch, in his bill review letter on the Homeowner's Tax Credit legislation, to conclude that the measure resulted in only a "temporary lack of uniformity" that might not be unconstitutional. See Bill Review Letter (House Bill 1281) from Attorney General Burch to Governor Mandel (May 20, 1977), reprinted at 62 Opinions of the Attorney General 859 (1977).1

The General Assembly extended the Homeowner's Tax Credit in 1978 for an additional year. Chapter 177 (Senate Bill 543), Laws of Maryland 1978. Then, in 1979, it extended the credit for two more years. Chapter 747 (House Bill 918), Laws of Maryland 1979. In approving the constitutionality of the 1978 bill, this office's bill review letter stated that, on the basis of the 1977 bill review letter concerning House Bill 1281, "we do not believe that this extension of the credit for one additional year would cause the provision to be unconstitutional." Bill Review Letter (Senate Bill 543) from Attorney General Burch to Acting Governor Lee (April 19, 1978).2 The next year, in approving the constitutionality of House Bill 918, Attorney General Sachs advised that:

"The question presented by this bill is whether the extension of the percentage limitation on homeowners assessments for a fourth and fifth year is of sufficient duration to violate the general requirement that assessments be calculated in terms of full value and in the same proportion as other assessments in the same class. It is our view that the extension for a fifth year is not constitutionally excessive. In upholding the 1977 enactment, the opinion of this office cited the case of Rogan v. Commissioners of Calvert County, 194 Md. 299, 310 (1950), in which a quinquennial assessment system was upheld. If it is permissible to make an assessment based on full value only once every five years, it is not unreasonable to conclude that a limitation on annual assessments during a similar period is also permissible.

"It is, then, our view that House Bill 918, which extends for a fourth and fifth year the tax credit for homeowners experiencing assessment increases exceeding fifteen percent, is constitutional. However, it must be reiterated that any statutory scheme to place a percentage limitation on assessment increases over a long duration would become unconstitutional as applied." Bill Review Letter (House Bill 918) from Attorney General Sachs to Governor Hughes (May 25, 1979).

In 1980, the General Assembly continued the credit for an additional year. See Chapter 858 (House Bill 1049), Laws of Maryland 1980. In his review of the legislation, Attorney General Sachs determined that the extension was "of doubtful constitutionality," noting that:

"Although a particular taxpayer may only qualify for a credit in one year but not in others, at the heart of the program is an overall, statutory limitation on the rise in assessments which House Bill 1049 would extend for a sixth year. Although it is difficult to say when a limitation of this sort has continued for such a length of time as to become unconstitutional, it is our view that there is clear authority, based on the Rogan case, only for a limit which does not exceed five years. Accordingly, we conclude that the General Assembly lacks clear authority to enact House Bill 1049 which would, in effect, extend the limitation for a sixth year." Bill Review Letter (House Bill 1049) from Attorney General Sachs to Governor Hughes (May 21, 1980).

Although no bill was enacted in 1981, in every subsequent session through 1986, the General Assembly extended the Homeowner's Tax Credit.3 On each occasion, Attorney General Sachs advised the Governor of the constitutional problems with the legislation. See Bill Review Letter (House Bill 64) from Attorney General Sachs to Governor Hughes (May 18, 1982) (extension is "of increasingly doubtful constitutionality"); Bill Review Letter (Senate Bill 298) from Attorney General Sachs to Governor Hughes (May 25, 1983) ("[W]ith each extension of this program, it becomes increasingly difficult to defend as a legal matter."); Bill Review Letter (House Bill 65) from Attorney General Sachs to Governor Hughes (May 24, 1984) ("Although it is difficult to state at what point the extension would unquestionably be unconstitutional, we wish to advise you that we would be unable to approve any extension beyond a 10th year, i.e., 1986-1987, without an amendment to Article 15 of the Declaration of Rights."); Bill Review Letter (House Bill 321) from Attorney General Sachs to Governor Hughes (May 20, 1985) ("[W]e will be unable to approve the extension of this program beyond the tenth [year] without an amendment to the Uniformity Clause."); Bill Review Letter (House Bill 789) from Attorney General Sachs to Governor Hughes (May 21, 1986) ("As the General Assembly has not proposed an amendment to Article 15, we are unable to approve [this bill]."). 4 Despite efforts of individual members of the General Assembly to remedy this problem by way of a proposed constitutional amendment, no such proposal has been approved by the General Assembly.

II
Application to TP §9-105

It has been the consistent position of this office that anything but a temporary percentage limitation on increases in residential assessments would offend the uniformity requirement of Article 15. For the reasons stated in 62 Opinions of the Attorney General 54 and reiterated over the years, we agree with the view of our predecessors that the Homeowner's Tax Credit results in a lack of uniformity that favors persons with valuable properties. We have found no Maryland case since the issuance of Attorney General Burch's 1977 opinion that would support the constitutionality of the statute in its present form.

The only remaining issue is whether the exemption they recognized for a "temporary" program of tax relief could be said to apply to a percentage limitation that has been in effect for more than a decade. In our view, to frame the question is to answer it: It is highly unlikely that a court would find a statute such as TP §9-105, nominally temporary but in fact the latest in a lengthy series of reenactments, to be consistent with Article 15.

III
Conclusion

In summary, it is our opinion that §9-105 of the Tax-Property Article violates Article 15 of the Maryland Declaration of Rights. As in the past, the Attorney General's office will offer whatever assistance the General Assembly desires to develop constitutionally permissible alternatives to the Homeowner's Tax Credit or to facilitate approval of a constitutional amendment to validate legislation like TP §9-105.

J. Joseph Curran, Jr., Attorney General
Robert A. Zarnoch, Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions and Advice

Editor's Note: In Chapter 776 (House Bill 244) of the Laws of Maryland 1988, the General Assembly extended and revised the local property tax credit program. In our bill review letter of May 23, 1988, we advised as follows: "To the extent that the bill merely extends the existing program even at a reduced rate, ... it is unconstitutional. However, to the extent that the bill revises the program to base the credit on income, ... it can be upheld as constitutional."

1 Specifically, the Attorney General stated that: "In 62 Opinions of the Attorney General 54 (1977) we stated that any statutory scheme to place a percentage limitation on assessment increases over a long duration would become unconstitutional as applied. However, the duration of the benefit provided by House Bill 1281 is limited to two years. Additionally, the bill's 'Preamble' specifies that its purpose is to provide relief to certain homeowners from the financial hardship imposed by assessments which increase annually at a more rapid pace than incomes. The Court of Appeals has specifically recognized that perfect uniformity is unattainable and that temporary inequities do not render an entire assessment plan invalid. Rogan v. Co. Commrs., 194 Md. 299, 311 (1950). Consequently, we can not say that the temporary lack of uniformity which would result from the limited relief provided by House Bill 1281 would be of such a constitutional dimension so as to offend Article 15." 62 Opinions of the Attorney General at 859-60.

2 The 1978 bill review letter added that: "This conclusion is reinforced by the fact that should House Bill 766 or Senate Bill 435, both of which increase the inflation allowance for homestead property be signed into law, very few homeowners will receive a tax credit as a result of Section 12F-7 for the 1978-1979 tax year."

3 See Chapter 597 (House Bill 64), Laws of Maryland 1982 (extension for a seventh year); Chapter 673 (Senate Bill 298), Laws of Maryland 1983 (eighth year); Chapter 755 (House Bill 65), Laws of Maryland 1984 (ninth year); Chapter 609 (House Bill 321), Laws of Maryland 1985 (tenth year); Chapter 854 (House Bill 789), Laws of Maryland 1986 (eleventh year).

4 This view of the unconstitutionality of the extension of the credit was also reflected in various letters of advice issued by attorneys in the Attorney General's Annapolis Office. See, e.g., Letter of Advice to Delegate Idamae Garrott (February 10, 1986); Letter of Advice to Senator Laurence Levitan (February 13, 1981).