The Honorable Thomas V. Mike Miller, Jr.
President of the Senate of Maryland
State House
Annapolis MD 21401-1991

Dear Mr. President:

In accordance with Article II, Section 17 of the Maryland Constitution, I today vetoed Senate Bill 515 - Personal Property Tax - Lien for Unpaid Taxes.

Senate Bill 515 provides that any personal property tax liens placed on real property by a local government are subordinate to any previously filed liens. According to the Attorney General, a lien for personal property tax debt that attaches to the debtor's real property is currently given a priority over other debts, such as mortgages, when recorded. The preferential treatment of this tax lien represents "long-standing Maryland law" that has enabled counties and municipalities to collect millions of dollars in delinquent personal property taxes.

Senate Bill 515 is identical to legislation I vetoed after the 1998 Session. In the past two years, I have received letters from mayors, town officials, county executives and county commissioners throughout Maryland raising serious concerns regarding the impact of this legislation on local revenues. If the current lien priority is eliminated, local governments will lose critical leverage to collect unpaid personal property taxes. In most cases it is the mere existence of these liens, rather than their use, that results in the payment of delinquent taxes. The elimination of this enforcement tool will result in a substantial loss in revenues to local governments at a time when localities are pressing to increase education funding and reduce class size in elementary and secondary schools.

In my 1998 veto message, I encouraged the Maryland Association of Counties, Maryland Municipal League and other representatives of local governments to work with the financial community to develop a narrowly tailored approach to the treatment of personal property tax liens in preparation for the 1999 Session. Unfortunately, a compromise was not reached and the Legislature chose instead to pass the identical bill I vetoed last year. My objections to this legislation stand. Once again, I urge local governments and the financial community to develop an alternative that will address the concerns of lenders over the security of loans while protecting the basic ability of local governments to collect delinquent property taxes.

For the above reason, I have vetoed Senate Bill 515.

Parris N. Glendening