OCEAN CITY – With the full support of Mayor Rick Meehan, the City Council voted this week to seek an independent opinion regarding the legal implications of a successful petition to reduce the property tax rate to the 2009 rate.
Last month the Ocean City taxpayers for Social Justice (OCTSJ) submitted a petition to lower Ocean City’s tax rate to the 2009 rate of 38 cents per $100 of assessed valuation. The same day the Mayor and City Council approved the Fiscal Year 2016 Budget that raise the tax rate 2 percent to 47.8 cents.
A couple of weeks ago, Board of Elections Chair Mary Adeline Bradford verified 1,787 petition signatures were submitted. Out of those signatures, 310 were excused, leaving 1,477 valid signatures, which exceeded the required 1,228 signatures needed to require the town conduct a referendum within 90 days or at the next scheduled election, which is in November of 2016.
City Solicitor Guy Ayres warned the council there is potential litigation surrounding the issue.
“In my opinion, the substance of the petition violates Section 6-303 of the Tax Property Article of the Maryland Code Annotated. The substance of the petition would amend the charter, so your ability to tax would be capped at the 2009 level of taxes, and that is known as a ‘tax rollback.’ In the case of Board of Election Supervisors vs. Smallwood … the court had ruled tax rollbacks are not proper charter material and violate Section 6-303,” Ayres said at that time.
The council met in closed session to discuss the petition prior to Tuesday afternoon’s work session.
“The council voted unanimously to file petition for declaratory relief with the Circuit Court for independent judicial review because the proposed charter amendment to reduce the property tax rate constitutes an unlawful rollback in violation with State law,” Council President Lloyd Martin said.
Tony Christ of OCTSJ, who led the petition drive, stated he is saddened that the council voted unanimously to oppose the people’s will, to which Meehan responded is a misinterpretation of the facts.
“The decision by the council to seek an independent opinion to determine whether or not the proposed charter amendment is lawful was a good decision. It is seeking a second opinion, an independent opinion. Not just the opinion of a select few who in my opinion have been inconsistent with their facts and continue to try to stand up here, misinterpret the facts and scare the voters and residents of Ocean City,” the mayor said.
According to Meehan, in Fiscal Year 2009 when the property tax rate was 38 cents the assessable base of the Town of Ocean City was just over $12 billion. The revenue derived from the property tax rate was about $45.3 million. The General Fund Budget was almost $80.5 million, and property taxes were 56.29 percent of the revenue in that budget year.
Today, in Fiscal Year 2016, the assessable base is about $8.4 billion, which is $4 billion less than in 2009, and the property tax rate is set at 47.8 cents. The revenue derived from the property tax rate is about $40.2 million, which is $5 million less than in 2009. The General Fund Budget is about $79.7 million, and the amount of revenue derived from property taxes is 50.44 percent of the total revenue, which is a reduction of almost 6 percent.
“The figures that are being expounded to the public are very deceiving when you look at the actual numbers, and you look at where we stand from a budget stand point,” the mayor said. “We have been criticized for utilizing constant yield. Well constant yield is not a mandate. It is a mechanism to show government what the tax rate would be to collect the same amount of tax revenue as received in the previous year.”
A tax rollback would be an arbitrary move, the mayor stated.
“The budget process is a six-month process where we sat here going over the budget making the determination of how to fund the level of services the entire city and all of our taxpayers expect and deserve. This council accepted that responsibility when they were elected, and they passed a budget that accomplished their goals while still held to the constant yield tax rate. They should be commended,” the mayor said.
As far as a random decision resulting in a negative impact, the mayor used the Worcester County Commissioners as an example who instituted a large tax increase this year rather than addressing reduced revenues in last year’s budget.
“How did that work out? Today they are back before the residents of Worcester County passing a budget that raises the tax rate 6.5 cents that doesn’t fully fund all the things they want them to fund,” Meehan said.
The mayor concluded today the Town of Ocean City’s Fund Balance stands at 15 percent, the highest it has ever been.
“There haven’t been any arbitrary decisions made up here. To every action there is a reaction, and when you make an arbitrary decision it may feel good at the time but you will pay for it later,” he said. “I commend the council for having the fortitude and courage for doing the right thing, to go through the budget process, to do exactly what those who have circulated the petition want them to do, and that is to look at every expenditure and every source of revenue and how the budget the needs of this community. That is what they have done and I support their decisions.”
Immediately following the work session, Christ, who left council chambers once the mayor started speaking, submitted a response to The Dispatch.
“My concern is that in America we are replacing the Rule of Law with the Rule of Lawyers. The council has authorized spending money to hire lawyers to kill the petition in court. We believe that it is very important for us to defend our right to petition our grievances that seeks to have a public vote on taxes. They show their utter disregard for the wishes of close to 1,500 voters and countless thousands of property owners in Ocean City. We will do our best to defend our right to petition our grievances for a public vote on taxes,” Christ stated. “We feel it is a right granted by the Bill of Rights and as such is not subject to restriction by state law.”