A property tax setoff arises when a county and municipal government recognize that the municipal government provides a particular service that is paid, in part, by county property taxes. When such a local agreement exists, the county may elect to reduce the county tax rate within the municipal area or furnish the municipal government with a rebate. 

Under the local Montgomery County bill, the County will reimburse municipalities for the County Executive’s approximation of the County’s costs for providing transportation, police, crossing guards, and park maintenance services. After almost 20 years of work and negotiations, the legislation will double the County’s reimbursement for municipally delivered services from $10.1 million for fiscal 2022 to $20.5 million. In addition, the bill requires an 80 percent phase-in for fiscal 2023, a 90 percent phase-in for fiscal 2024, and a complete phase-in for fiscal 2025.