The HHS Committee session held on February 7, 2025, focused on the review of tax credit applications for homeowners and renters, highlighting significant trends and adjustments in eligibility and funding.

The meeting began with a presentation of Exhibit 10, which detailed the number of homeowners' and renters' tax credit applications, along with their eligibility percentages. From fiscal year 2023 to 2024, homeowners' tax credit applications rose by 5.3%, with eligible applications increasing to 64.7%, a 1.2% rise. However, a correction was noted regarding renters' tax credit applications; the percentage of eligible applications was revised from 60% to 47%.

The committee discussed the long-term factors affecting eligibility, particularly the income thresholds that have not been updated in over 18 years for homeowners and over 7 years for renters. This stagnation may be contributing to the discrepancies in application eligibility as wages and salaries continue to rise.

Exhibit 11 illustrated the spending trends for homeowners' tax credits from fiscal 2017 to the projected 2026 allowance. After a decline in utilization from fiscal 2021 to 2023, spending surged to $60 million in fiscal 2024. The fiscal 2025 budget initially allocated $48 million, but a proposed efficiency appropriation would increase this to $64.3 million. The fiscal 2026 allowance is set at $56 million, which is lower than the actual spending in fiscal 2024, raising concerns about whether this funding is adequate given the recent uptick in applications.

Exhibit 12 presented the spending trends for renters' tax credits, showing a significant decrease from fiscal 2020 to 2021, followed by a steady decline until fiscal 2023. However, spending rebounded in fiscal 2024, increasing by 63% from the previous year. Despite this surge, the fiscal 2025 working appropriation reflects a $1.4 million decrease due to a negative deficiency. The fiscal 2026 allowance for renters' tax credits remains largely unchanged, with only a $100,000 increase compared to fiscal 2025.

The committee concluded with a request for further commentary on the factors behind the fluctuations in renters' tax credit utilization and the anticipated return to spending levels seen in fiscal 2023. The discussions underscored the need for ongoing evaluation of tax credit policies to ensure they meet the needs of Maryland residents effectively.