Commissioners Agree To Raise Property, Income Tax Rates To Balance Budget

SNOW HILL – In an effort to soften the impact on local taxpayers, county officials are planning to combine a property tax increase with an income tax increase to balance the budget.

Though the Worcester County Commissioners originally advertised for a 15.7 cent property tax increase, on Wednesday they agreed to base the coming year’s budget on a 6.5 cent property tax increase and a 40-percent income tax increase. The income tax rate, which is 1.25 percent now, would rise to 1.75 percent.

“I think it’d hurt the lower income families less by doing a combination,” Commissioner Jim Bunting said.

Bunting suggested lowering the proposed property tax increase and pairing it with an income tax increase during a budget work session Wednesday. He pointed out that Worcester County’s income tax rate, at 1.25 percent, was the lowest in the state. The next highest rate is that of Talbot County, which is 2.4 percent. Bunting said raising the rate to 1.75 percent would cost a family of four that made $25,000 a year just $32 annually. It would cost a family of four making $75,000 a year $282.

“The piggyback tax is the lowest in the state,” Bunting said, “and it’s been that way for well over 30 years. When we receive funding from the state for our educational system, we’re always being criticized because we’re not having the intestinal fortitude to do something with these taxes. If we did something on that level, we might see some increases in funding from the state.”

Commissioner Joe Mitrecic said that by raising the income tax rate, the county would generate enough money that officials could lower the proposed property tax increase, which had been set at eight cents in the draft budget being considered Wednesday.

“To Ocean City, it would be a more fair tax,” he said.

Commissioner Ted Elder said he felt raising both tax rates slightly would be better for those on low incomes.

“We’re still going to be the lowest in the state,” he said.

Commissioner Chip Bertino expressed concern over the proposal.

“In my district I have a lot of retirees and people on a fixed income,” he said. “To increase their income tax, I’m struggling with that.”

Elder replied that those on fixed incomes wouldn’t be effected as much as those who made a substantial amount, as Bunting’s numbers had shown.

“They’re going to be on that lower scale anyway,” he said.

County staff prepared multi-year projections showing what the various tax scenarios would leave the county with in the coming years. The 6.5-cent property tax increase and the .5 percent adjustment to the income tax rate would enable the county to fund the coming year’s budget, which officials have trimmed to $181 million, and leave a surplus of $1.5 million. Tax increases at those levels would also enable the county to maintain a budget stabilization fund of about $10 million.

Bertino again questioned the impact higher taxes in both areas, property and income, would have on residents.

“They could end up in some cases paying several hundred more dollars a year,” he said. “I think it’s wrong personally. I think we’d be doing a disservice to the majority of people.”

Bunting pointed out that residents would receive most of what they paid in the income tax increase back when they filed their tax returns.

Harold Higgins, the county’s chief administrative officer, pointed out that most people used their tax refund for a big one-time purchase, not day-to-day expenses.

“When you take an additional amount out of their pay check, you’re affecting their ability week to week that they live on,” Higgins said.

Bertino said he wanted to leave income tax levels alone and raise the property tax rate by eight cents.

“If we can accomplish the same thing at eight cents as opposed to lowering what people bring home in their pay check that’s the better way to go,” he said.

Mitrecic said most county citizens at the lower end of the pay scale rented homes. With a substantial property tax increase, he believes their landlords will raise rents.

Elder agreed. He said he’d been on both sides of the issue, as he’d rented a home years ago but was now a landlord.

“I’d much rather take an extra amount out of my paycheck each week than have my landlord raise my rent,” he said.

Bertino, whose motion to stick with a property tax increase failed with no second, maintained his opposition.

“Whichever pocket it’s coming out of he’s going to make it up,” he said in response to the landlord scenario.

In the end, the commissioners voted 6-1, with Bertino opposed, to move forward with the combination of tax increases.

Following the commissioners’ latest round of budget cuts, the $22 million shortfall cited at the beginning of the budget process has been eliminated. The $82.7 million the Board of Education sought from the county has been trimmed $79 million. According to county staff, that amount of funding will meet Maintenance of Effort requirements and cover increased health insurance costs.

At the close of Wednesday’s session, Mitrecic tried one more time to get support from his fellow commissioners for installing a camera system to allow county residents to watch the board’s meetings online. He said during the month of April more than 3,000 people watched the videos of council meetings the Town of Ocean City posted on its website.

“People want to know what is going on,” he said.

While the commissioners said they supported the concept, they did not want to include $65,000 in the budget for it. Commissioner Bud Church said he thought it could be done for less than $65,000. Bunting too said he was investigating ways it could be done cheaper. Commissioner Merrill Lockfaw said that considering the “strong” cuts the commissioners had just made to the budget, it wasn’t the right time for the costly project.

“Sixty-five thousand for a video system is ludicrous at this time,” he said.

 

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