Mathias Wants County, OC To Discuss Tax Differential

OCEAN CITY
– With no action from the county on Ocean
City’s request for
support on the tax differential, the Ocean City Mayor and Council has asked
Delegate Jim Mathias to go ahead with the legislation without the county’s
support.

The town sent the letter Tuesday.

“That was a parallel path to follow for legislation,” said

Ocean City Mayor Rick Meehan. “We’d certainly like to sit down with the County Commissioners.”

Mathias said Wednesday he would not submit the legislation
until the town and county work out their differences.

“I’m encouraging them to sit down and talk,” Mathias said.
“Before I do anything, I want to see how well they manage the situation.”

Meehan presented an analysis of the financial impact of
the tax differential, commissioned by Ocean City,
to the Worcester County Commissioners in December and requested a meeting with
county officials to discuss the findings.

“We have had no response from the County Commissioners,”
Meehan said.

County Commissioner Louise Gulyas, who represents the
resort, wants a meeting, but there does not seem to be support among a majority
of her colleagues.

“I would like the commissioners to have a meeting with the
Mayor and City Council without administrators, without lawyers, and sit down
and discuss what they really need and want,” said Gulyas.

Ocean City
is asking the county to support legislation in Maryland’s General Assembly to cut the tax
rate in the resort. Proponents of the tax differential say that property
owners, particularly out-of-town property owners who pay taxes on the full
value of their real estate, are paying twice for duplicated services.

Ocean City
provides its own police department, for example, and Ocean
City property owners should not also
pay for law enforcement in Worcester
County, tax differential
supporters feel.

Worcester County’s
property tax rate is the second lowest in the state of Maryland.   

There has been no meeting between Worcester
County and Ocean
City because county staff has not
completed its evaluation of Ocean
City’s tax differential
analysis, one commissioner said.

“When our staff has finished evaluating what the study has
said, then we will reply,” Commissioner Virgil Shockley said. “We’re waiting
for our staff to report back to us so we know what the heck we’re talking
about.”

The holiday season, staff vacations, and the business of
running the county’s daily business has delayed the staff evaluation, Shockley
said.

“The rest of the county does not stop simply because of a
tax differential that may or may not happen with Ocean City,”
Shockley said.

The resort contends that property owners overpay in taxes,
for duplicated services, by $13 million.

“Do I think Ocean
City has been
shortchanged over the years? Yes. Do I think they’ve been shortchanged $13
million? Absolutely not,” Commissioner Bud Church said.

Church said losing that amount of money “would be
devastating to the county.”

Shockley agreed, asking, “Could you afford to lose $13
million?”

As proposed, the tax differential will save Ocean City 6
cents for every $100 of assessed value, leaving every other Worcester County
property owner to pay an additional 22 cents per $100 of assessed value, to
make up the shortfall, if the county budget remains the same. Under a tax
differential, the rest of Worcester County would pay a total tax of 92 cents per $100
assessed value, while Ocean
City property owners
would paid just 64 cents per $100 of assessed value.

“I will not vote for a 22-cent tax increase,” Shockley
said.

“I don’t think my constituents would be at all happy to
know their taxes were going up,” said County Commissioner Linda Busick. “I know
I couldn’t support it.”

Mathias acknowledged the situation deserves a lot of
consideration.

“Taxes are very sacred issues. At any time an increase is
of grave concern,” Mathias said.

Without an increase in taxes on the rest of the county,
services would have to be cut if a tax differential passed, and the
municipalities, including Ocean
City, would lose county
funding.

“The county would be forced to make dramatic cuts,”
Shockley said. “Even to maintain services you’re looking at a substantial
increase to keep them at the level they are now.”

Meehan disagreed with the reference to a tax increase.

“It’s not an increase in tax to anybody. It’s about
fairness and about proper distribution of revenue,” Meehan said. “Ocean City
is 62 percent of the assessable base of Worcester County.”

Shockley said Ocean
City should be careful
what it wishes for.

“What do they think is going to happen if we give them a
tax differential?” Shockley wondered. “The grants and loans are gone. There’s
not going to be an OCDC [Ocean City Development Corporation] grant, convention
center grant. There’s a huge list of things there’s not going to be if this
comes about.”

While the county could gain as much as $4 million in
property tax revenue next year from recent reassessments, the increase will be
canceled out by bond payments on the new vocational high school and the
renovations to Pocomoke
High School.

More state funding cuts loom as well.

“This budget was shaping up to be tight before the tax
differential was looked at,” Shockley said.

“There needs to be a middle ground,” Busick said.

Ocean City’s pursuit for tax relief has come
at a bad time, Shockley said. The county faces state funding cuts, a depressed
housing market and higher costs as well as a resort that has asked for a lot of
help recently. Ocean
City has asked for tax
cuts or freezes on amusement park property and major financial help with a
downtown parking garage in the last year.

“The biggest problem with Ocean City
is they’re sending mixed signals,” Shockley said.

Church, who owns a real estate business in Ocean City,
added, “I’m not going to give them millions of dollars for a parking garage
when they want a tax differential.”

Private property owners have requested the amusement park
tax district, not the town, Meehan said.

The Ocean City Council supports tax relief for the
amusement properties, Meehan said. The parking garage tax district does not
require money from the commissioners outright, Meehan said, asking instead for
half of any increase in tax revenue on properties below the Route 50 Bridge to
be dedicated to bond payments for the garage. Investing in the parking garage
will increase downtown property values, bringing in more money in the long run,
he said.

“There’s a compromise there some place,” Church said.
“There needs to be some good hard negotiating going on.”

Gulyas said communication should be better between the
town and county.

“We need to have better bridges of communication with the
town,” Gulyas said.

On that, Meehan said,         “I
think [communication] is okay as long as we don’t ask for something they don’t
agree with. We’re certainly willing to talk about the issue and address it in
some form that we do gradually, to address the whole issue.”

 

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