For purposes of this Division the following words and phrases have the meaning assigned below, except in those instances in which the context clearly indicates a different meaning: County-wide property assessable base shall mean the total County assessable tax base, including all municipal corporations, as used in the County's latest adopted budget. County-wide real property assessable base shall mean the County real property assessable tax base, including all municipal corporations, as used in the County's latest adopted budget. County-wide personal property assessable base shall mean the County personal property assessable tax base, including all municipal corporations, as used in the County's latest adopted budget. Degree of services or programs shall mean the level of eligible services or programs performed by the municipal corporation instead of the County. Director shall mean the Director of the Office of Management and Budget. Eligible services or programs shall mean those services or programs which are performed by a municipal corporation, and are wholly or partially funded from property tax revenues of the municipal corporation, instead of similar County services or programs when the similar County services or programs are wholly or partially funded from property tax revenues in the County's general fund and the services or programs are generally performed by the County in the unincorporated areas of the County. Municipal Corporation shall mean a city or town incorporated pursuant to Article XI-E of the Maryland Constitution which is partially or entirely within the boundaries of Prince George's County. Net County service or program cost shall mean the cost for a service or program as reflected in the County's latest adopted Current Expense Budget and support documents increased by the amount of indirect costs, including fringe benefits, applicable to that service or program and reduced by any fees, service charges, grants or other revenue directly attributable to that service or program. Property tax shall mean County general fund property tax revenues as stated in the County's latest adopted budget.

There is hereby established a municipal tax differential program pursuant to Section 6-305 of the Tax-Property Article of the Annotated Code of Maryland. The County real property tax rate to be set for assessments of real property in a municipal corporation shall be calculated and established as follows: For each eligible service or program, the County shall calculate the net County service or program cost. The net County service or program cost for each eligible service or program shall be calculated to reflect the portion supported by the general fund real property tax revenues. The County shall convert the calculated cost for each eligible service or program into a real property tax rate equivalent by dividing the calculated County service cost by the Countywide real property assessable base. The differential for each municipal corporation shall be calculated by multiplying the degree of service or program performed by the municipal corporation by the real property tax rate equivalent. The differential determined pursuant to this Section shall be rounded to the nearest tenth of a cent. The County personal property tax rate to be set for assessments of personal property in a municipal corporation shall be calculated and established as follows: For each eligible service or program, the County shall calculate the net County service or program cost. The net County service or program cost for each eligible service or program shall be calculated to reflect the portion supported by the general fund personal property tax revenues. The County shall convert the calculated cost for each eligible service or program into a personal property tax rate equivalent by dividing the calculated County service cost by the Countywide personal property assessable base. The differential for each municipal corporation shall be calculated by multiplying the degree of service or program performed by the municipal corporation by the personal property tax rate equivalent. The differential determined pursuant to this Section shall be rounded to the nearest tenth of a cent. The County real property tax rate and the personal property tax rate to be levied against all property located within a municipal corporation shall be computed in the following manner: Beginning in Fiscal Year 2002, the applied tax differential rate for each municipality shall be the average of the real property tax differential rate and the average of the personal property tax differential rate calculated in accordance with Subsection (b) ) and Subsection (c) for the ensuing fiscal year and the calculated real property tax rate and the personal property tax rate for the current fiscal year and the immediately preceding three fiscal years, provided, however, that for purposes of determining the applied tax differential rate, the tax rate levied in fiscal years 1995 through 1998, inclusive, shall be used in lieu of a calculated rate. Beginning in Fiscal Year 2004, the real property tax differential rate and the personal property tax differential rate for each municipality shall be the average of the real property tax differential rate and the average of the personal property tax differential rate calculated in accordance with Subsection (b) and Subsection (c) for the ensuing fiscal year and the calculated real property tax differential rate and the personal property tax differential rate for the current fiscal year and the immediately preceding fiscal year. For Fiscal Year 2002, Fiscal Year 2003, and Fiscal Year 2004 only, the applied tax differential rates for each municipality shall be the average of the real property tax differential rate and the average of the personal property tax differential rate calculated in accordance with Subsection (b) and Subsection (c) for the ensuing fiscal year and the tax differential rates for the current fiscal year and the immediately preceding three fiscal years. For purposes of determining the applied tax differential rate for real property for fiscal years prior to Fiscal Year 2001, the County real property tax rate for those fiscal years shall be calculated by multiplying the real property tax rate by a factor of .40.

By December 7, the County shall notify the municipal corporation of the County's determination regarding the degree to which the municipal corporation is providing one or more eligible services in lieu of the County. Any disagreement shall be subject to negotiation between the County and the municipal corporation. If the County and the municipal corporation are unable to agree on the degree to which the municipal corporation is providing one or more eligible services or programs by January 15, the matters in dispute shall be submitted to an Arbitration Panel. The deadline may be extended by mutual agreement. The Arbitration Panel shall be comprised of the following: One member selected by the municipal corporation involved in the dispute; One member selected by the County Executive; One member selected jointly by the above members. At the arbitration hearing, the County and the municipality may present testimony, evidence, and oral argument as to the matters in dispute. The Arbitration Panel shall issue its advisory determination to the County Executive and County Council no later than February 15.

The County shall provide to each municipal corporation by October 7 of each year a copy of the County's adopted Current Expense Budget for the fiscal year which began the preceding July 1, which documents shall be used in determining the tax differential. The County shall provide to each municipal corporation a standardized report form listing each potentially eligible service. Municipal corporations shall report to the Director upon such forms and shall set forth such information as the Director may prescribe and require. Information submitted by any municipal corporation is subject to verification by the Director. Each municipal corporation shall identify, in ten percent (10%) increments, the degree to which it is providing eligible services to its citizens in lieu of the County providing those services. Each municipal corporation shall complete and return the standardized report to the County by November 7 of each year.

The Director may make, adopt, and amend such rules and regulations as the Director may deem necessary to implement the provisions of this Division.

The Tax Differential Task Force shall mean an appointed body for the purpose of conducting an annual review and the Task Force shall be comprised of the following representatives: One Member from the Office of the County Executive; One Member from the County Council; One Member from the Office of Management & Budget; Two Members designated by Prince George's County Municipal Association; Two Members from unincorporated areas of the County and appointed by the Chair of the County Council. The Tax Differential Task Force shall conduct an annual review of the Tax Differential program and rules adopted by the Director for its implementation, including methods of ensuring adequate public awareness. This review shall be completed on or before July 31 of each year. Appropriate recommendations shall be submitted by the Task Force to the County Executive, as may be necessary.