County Disputes Resort’s Tax Differential Findings

SNOW HILL – Ocean City has requested the third highest tax set-off in Maryland and is asking for the highest percentage of reduction in the entire state, Worcester County Treasurer Harold Higgins said this week when he presented the staff analysis of the Ocean City tax differential report to the County Commissioners.

Staff findings refuted the Ocean City-commissioned tax differential report, concluding that in nine of 13 categories where the resort contends taxpayers are being charged twice the resort’s taxpayers do benefit directly or indirectly.

Only Anne Arundel ($16.5 million) and Prince Georges ($14.2 million) counties provide a larger amount of tax set-off to their municipalities overall, compared to Ocean City’s request for $13.9 million in tax relief.

“Worcester County would have the third highest tax set-off in the state,” said Assistant Finance Officer Phil Thompson.

The Anne Arundel County set-off is only 1.1 percent of the county budget, while the Prince George’s County tax set-off is 0.55 percent of its total budget.

Ocean City has asked for a 9.6-percent tax set-off.

The state average tax set-off is 0.719 percent.

“The Ocean City request is 13 times the state average,” Thompson said.

“The county departments have concerns with many of the assumptions made in this study,” said Higgins.

The resort requested $4.2 million in tax set-off in the law enforcement category. According to the staff report, the Worcester County Sheriff’s Office patrols Ocean City’s borders every day; transports prisoners from across the state, 65 percent of which relate to Ocean City cases; steps up patrols and supports resort police during special events; and keeps the roads to Ocean City safe.

Under emergency services (tax set-off requested $1.5 million), Worcester County operates the 911 emergency center for the entire county. Ocean City is the back-up center for the county 911 service and has received communication equipment worth millions of dollars.

Ocean City also receives services from seven other county departments: Public Works, Development Review and Permitting, Comprehensive Planning, Environmental Programs, Recreation and Parks and Tourism. The town also benefits from county debt service, staff say.

“The implication was, ‘we do everything, nobody else does a damn thing,’ which is false,” Commissioner Virgil Shockley said.

Higgins said a tax differential could mean eliminating town grants in the county budget.

“The Ocean City request creates a $13.9 million void in our budget,” Higgins said. “We may well have to eliminate grants to towns. We may have to eliminate grants to Ocean City.”

Ocean City receives $2 million in Worcester County grants over and above state requirements.

Consultants from the Municipal and Financial Services Group of Annapolis, which prepared the Ocean City tax differential study, never contacted county staff, according to Shockley.

“They never bothered calling anybody at the county,” Shockley said. “They took the budget and they just stayed with the numbers from the budget and never asked for an explanation for anything.”

Higgins said the request is far reaching.

“Ocean City’s request doesn’t just affect the residents of Ocean City, it effects each and every one of Worcester County’s residents,” Higgins said.

The population outside the resort, 41,000 people, would see large increases in their property taxes, while 7,000 Ocean City residents would see decreases, if the budget remained the same as last year, according to Higgins.

The owner of a $600,000 home in Ocean City would save $360, while the owner of a $600,000 home outside the resort would pay an additional $360.

“There doesn’t seem to be any fairness in that,” said Commissioner Linda Busick.

Many Ocean City property owners supporting the tax differential are non-resident and do not benefit from the homestead tax credit. Those property owners pay taxes on the full value of any increase in tax assessments. “These are people who have very expensive property and they have the luxury of affording second homes,” Busick said.

The commissioners did not discuss the staff’s report after the presentation concluded.

“That’s the first time we’d seen it so we had to take it in and look it over,” said Commissioner Louise Gulyas later in the week. “I have a lot of questions about it. I want more figures. I want to sit down and take it apart.”

Busick said she’s still considering the tax differential.

 “Perhaps there is some room to talk about what they need,” Busick said. “Perhaps we can provide some additional funds to Ocean City. I wouldn’t close the door on it, but I certainly don’t see doing it in this form.”

Shockley said some relief could be considered, perhaps at the level of the average state tax differential.

The commissioners and staff are planning to meet with their Ocean City counterparts before the next commissioner meeting on March. 5.