Wicomico Approves Income Tax Rate Increase

SALISBURY – Wicomico County’s budget is up in the air as officials wait for word from the state on how pending legislation will affect its finances, but the County Council did come to terms with increasing the income tax rate.

For the last few weeks, Wicomico County has been watching the Maryland legislature, which has cast a “doomsday” budget. A Senate Bill, Maintenance of Effort (MOE), had been passed requiring the county to increase its contribution to the Board of Education by $7 million, leaving a gap to fill in the county’s budget.

Wicomico County’s 2013 Operating Expense Budget had been presented during a public hearing last week and was scheduled to be presented to the County Council on Tuesday morning, but when the staff found out an amendment was not passed in the Maryland General Assembly, plans changed.

“It was confirmed that Senate Bill 152, which was the bill that would have corrected the MOE rebasing, had in fact been agreed to by the chair of the Senate Tax Appropriation Committee but had not had time to pass,” county administrator Wayne Strausburg said.

With that being the case, Wicomico County now faces a $14 million MOE budget gap, pending the resolution of a predicted special legislative session to fix the state budget.

“We simply couldn’t contemplate a $14 million gap,” Strausburg said. “It is just not responsible, it is a disservice to the citizens of this county and it is not a budget that we prepared to contemplate.”

Strausburg explained that County Executive Rick Pollitt, who was not present during the meeting, has asked for a two-week extension of the date to submit the Expense Budget for the new fiscal year to May 1 in order to receive a clarification of the MOE rebasing and to continue negotiations with the state.

“Basically we got a $14 million hole in our budget if they [General Assembly] do not call a special legislative session,” Council President Joe Holloway said.

Strausburg said that if a special session is not held in Annapolis the County Executive’s office will submit a waiver to the Board of Education to request exemption from the MOE for a year. If the school board does not except the waiver, the county will have to look to judicial relief.

Councilman Bob Culver asked if an option to cover the $14 million is through the county’s reserve fund.

“This county cannot contemplate a $14 million appropriation from its reserve fund. We simply can’t do it,” Strausburg said. “It would simply be irresponsible. It would be inappropriate and a disservice to our citizens. We would have to unveil ourselves above our mechanisms and those mechanisms would be either judicial relief or take the state up on its offer to increase our income taxes …”

Finance Director Andy Mackel reviewed the proposed budget presented last week based on the initial $7 million gap in the budget.

The total budget is about $115 million. It includes a 7-cent increase in property tax and an increase in income tax from 3.1 to 3.2 percent to cover shortfalls, but even with additional savings the budget calls for $3.4 million to be pulled from the reserve fund.

“In order to be even eligible for legislative remedy … the county must have committed to the maximum property tax rate allowed under our charter,” Council Administrator Matthew Creamer said. “The county would have to pass the current pending legislation to increase the income tax to 3.2 percent.”

At that point, the County Council voted to extend the date for the submission of the Expense Budget for the next fiscal year and as council members moved through the agenda, they also voted to approve an increase in the county income tax rate from 3.1 percent to 3.2 percent.

“It is just a big what if at this point,” Councilman John Hall said. “Until we know if the governor is going to allow a special session and until then there is nothing we can do except make estimates…”