Thursday, November 7, 2013

Working Families Income Supplement Bill Enacted


The Montgomery County Council on Oct. 29 unanimously enacted Expedited Bill 8-13. The bill increases the County’s Working Families Income Supplement for low-income households to 90 percent of the Maryland refundable credit beginning in Fiscal Year 2015, 95 percent in FY16 and 100 percent in FY17 and beyond.

The chief sponsor of Expedited Bill 8-13 is Councilmember Hans Riemer. Councilmembers Roger Berliner, Marc Elrich and George Leventhal were co-sponsors. The Government Operations and Fiscal Policy Committee, which is chaired by Nancy Navarro and includes Councilmembers Riemer and Valerie Ervin, at a worksession on Oct. 21 voted 3-0 to recommend that the full Council pass the bill with several modifications.
The bill permits the Council to approve a lower amount in the annual operating budget by a vote of at least five Councilmembers. The minimum funding levels in the bill for the WFIS will not apply in any year that the State increases its refundable earned income credit above the current level.  

“Montgomery County is often thought of as one of the wealthiest counties in America. But while we do have many prosperous communities, we also have a very high cost of living,” said Councilmember Riemer. “Experts estimate that a household with two adults and one preschooler needs $89,784 to get by. Many thousands of residents struggle to earn this much, and poverty is growing faster in our County than anywhere else in the region. As the County slowly recovers from recession, it's only fair to working families that we help them recover too. I am gratified that we continue to look out for our most vulnerable residents.”
Started in 1975, the EITC allows households earning income to apply tax credits to their returns. The County Working Families Income Supplement (WFIS) is derived from the federal earned income tax credit (EITC). The EITC is a refundable tax credit for lower income working families and individuals. Recipients of the WFIS include some of the lowest-paid residents of the County. To qualify for the EITC in Tax Year 2013, a taxpayer must earn less than:
·       $46,227 ($51,567 married filing jointly) with three or more qualifying children
·        $43,038 ($48,378 married filing jointly) with two qualifying children
·        $37,870 ($43,210 married filing jointly) with one qualifying child
·        $14,340 ($19,680 married filing jointly) with no qualifying children

The Tax Year 2013 maximum credit is:
·       $6,044 with three or more qualifying children
·       $5,372 with two qualifying children
·       $3,250 with one qualifying child
·       $487 with no qualifying children

In FY11, the County had 33,840 WFIS recipients who received an average amount of $381.81 each.  Restoring the County match to 100 percent would provide an additional $124, for a total of $505.81.  For a worker on the edge, this could mean making a car payment, paying an overdue utility bill, or paying rent.  The program encourages people to work because a recipient must have earned income to be eligible for a refund. 

Twenty-two states (including Maryland), the District of Columbia, New York City and Montgomery County offer their residents a WFIS based upon the EITC. Maryland permits residents to claim a credit of one-half of the federal EITC and provides a refund for up to 25 percent of the federal EITC. In 2000, the County began matching 100 percent of the Maryland refundable credit to help working County residents meet the high costs of living in Montgomery County. In May 2010, the Council enacted Expedited Bill 33-10, which permitted the Council to set the WFIS at less than 100 percent of the Maryland refundable credit by resolution each year.

Accordingly, the Council set the WFIS at 72.5 percent for FY11, 68.9 percent for FY12 and 75.5 percent for FY13.
On May 23, 2013, the Council appropriated funds to increase the WFIS to 85 percent of the Maryland refundable credit during FY14.