OCEAN CITY — The mayors of the Lower Shore’s two most well-known municipalities rallied this week in support of a House bill in the General Assembly that would address the decades-old issue of tax differential.
House Bill 690, called the Property Tax Fairness Act of 2015, would alter the formula by which counties in Maryland pay property tax setoffs to their municipalities for duplicated services and programs. For example, Ocean City provides services such as fire and police protection, ambulance service, recreation and parks and other programs to its municipal taxpayers, who are essentially double-billed for the services in their property taxes to Worcester County.
House Bill 690 is an attempt to address the property tax setoff issue by creating a process by which the cost of duplicated services can be negotiated by the counties and their towns. The bill, if approved, would change certain counties in Maryland, including Worcester and Wicomico, from “may” produce a tax setoff to “shall” produce a tax setoff.
Ocean City Mayor Rick Meehan this week fired off a letter to House Ways and Means Committee Chair Sheila Dixon in support of the proposed Tax Fairness Act of 2015.
“On behalf of the Mayor and City Council of Ocean City, as well as nearly 35,000 dually-taxed municipal tax payers in the town of Ocean City, I am writing to express the town of Ocean City’s strong support of the Property Tax Fairness Act of 205,” Meehan’s letter reads. “Since 2007, the town of Ocean City has met the statutory requirements and requested to meet with the Worcester County Board of County Commissioners for the purpose of discussing a tax differential and/or tax set-off to compensate for the double taxation of the town’s municipal taxpayers occurring when both municipal and county property taxes are levied to fund similar or identical programs and services.”
In the letter, Meehan explained the somewhat unique tax differential issue between Ocean City and Worcester County.
“The town’s most recent Tax Differential study, completed in February 2013, identified and confirmed more than $17.1 million in Worcester County programs and services that were neither available nor provided to Ocean City taxpayers by Worcester County because the town of Ocean City provided those same or comparable programs and services to its municipal taxpayers,” the letter reads.
Just this week, the Ocean City Mayor and Council initiated a proposed Memorandum of Understanding with Worcester County to establish a funding formula and predictable methodology for determining annual county grant funding to the town in lieu of further discussion regarding tax differential. While hopeful the proposed MOU will clarify the county’s grant process for Ocean City, town officials are looking to the General Assembly for a long-term solution to the tax differential problem.
“While the town of Ocean City remains optimistic of the pending discussion and ultimate outcome, the town also strongly supports the Maryland General Assembly’s effort to reasonably address the equity and fairness to dually-taxed municipal tax payers throughout the state of Maryland,” the letter reads.
According to the 2013 study by the independent Municipal and Financial Services Group, Worcester County derives 60 percent of its property tax revenue from the town of Ocean City. The study concluded as a result, Ocean City should receive about $17 million from the county in tax set-offs. In the current fiscal year, the town received grants from the county totaling just $3 million.
According to the fiscal and policy note attached to House Bill 690, 18 of 23 jurisdictions in Maryland paid property tax setoffs to their municipalities in fiscal year 2014. Of the remaining five, Baltimore and Howard counties have no municipalities, leaving only Worcester, Wicomico and Dorchester counties as the only jurisdictions currently without established property tax setoffs.
Along with Meehan’s effort, Salisbury Mayor Jim Ireton, Jr. this week was part of a coalition of mayors from cities and towns around Maryland to lobby in Annapolis on behalf of the bill.
On Wednesday, Ireton, acting as First-Vice-President of the Maryland Mayors Association, lobbied in Annapolis in support of House Bill 690, which, among other things, seeks to re-categorize remaining counties in Maryland from “may” produce a tax setoff for municipalities to “shall” produce a tax setoff for municipalities.
This would mean counties must provide a property tax setoff if a county and a municipality within the county are providing parallel services paid for with property tax dollars.
“Maryland counties have balanced their budgets on the backs of Maryland cities for far too long,” said Ireton. “I went to Annapolis on behalf of Salisbury, Delmar, Fruitland, Ocean City, Crisfield and the more than 900,000 Marylanders who live in municipalities that are taxed by counties.”