County, Federal Court Opinions Sought On Tax Referendum

OCEAN CITY — In what appears to be a case of the cart before the horse, organizers of a petition drive to return the property tax rate in Ocean City to 2009 levels filed a complaint in U.S. District Court earlier this month seeking a federal review of the validity of the petition.

In May, a group of concerned property owners in the resort operating — Ocean City Taxpayers for Social Justice — submitted a petition to lower Ocean City’s tax rate to the 2009 level of 38 cents per $100 of assessed value. On the same day, the Mayor and Council approved the fiscal year 2016 budget.

In simplest terms, the Ocean City Tax Payers for Social Justice group if seeking a return to the 2009 property tax rate of 38 cents, asserting the increase in the rate over the years has forced many to leave Ocean City to neighboring jurisdictions and has stifled the growth of small business.

Meanwhile, the Mayor and Council have contended the increase in the property tax rate in recent years to the fiscal year 2016 rate of 47.8 cents is consistent with the constant yield, or the rate needed to generate the same amount of revenue required to continue to provide the same level of municipal services residents and visitors have come to expect.

In June, the Ocean City Taxpayers for Social Justice submitted a petition containing 1,477 signatures validated by the state Board of Elections. The number of valid signatures needed to force the requested return to the 2009 property tax rate needed to be 20 percent of the current 6,141 registered voters in Ocean City, or in this case 1,228, which the petition clearly exceeds. The petition seeks a referendum in November 2016.

On June 23, the council voted unanimously to file a petition for declaratory relief in the Worcester County Circuit Court in attempt to gain an independent judicial review and to stop the petition from going to a referendum on the advice of City Solicitor Guy Ayres, who asserted the petition in essence was illegal and amounted to a tax rollback.

“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,” said Ayres at the time.

Last Friday, the Mayor and Council filed the petition for declaratory judgment in Worcester County Circuit Court, seeking a judicial review and attempting to halt the referendum at the local level.

However, anticipating the Mayor and Council’s move at the Circuit Court level, the OCTSJ and Christ, along with three other plaintiffs including Herb Pawlukewicz, John Medlin and former Ocean City Councilman Joe Hall, on July 1 filed a complaint in U.S. District Court seeking a Habeas Corpus hearing at the federal level. Essentially, the four plaintiffs are not confident the petition to return the tax rate to the 2009 level will get a fair shake in Worcester County Circuit Court.

“Only a federal context can grant us the relief of a proper hearing of our grievances,” the complaint reads. “Your plaintiffs respectfully believe the issues are federal and relate to the U.S. Constitution and Bill of Rights, and that the Maryland statutes will not be properly held in a subordinate understanding to a people’s natural right in a Maryland trial. Hence, we hope and pray for an opportunity through a Habeas Corpus hearing to show the court that the issuance of a writ of Habeas Corpus is just and proper in this circumstance.”

The complaint rejects the city’s contention of a tax rollback.

“The petition offered voters a choice of a lower rate of taxation, going forward, of 38 cents,” the complaint reads. “The petition in no way attempted to restrict the Council and,

therefore could be changed by a majority vote of the Council with the resulting accountability and consequences. The petition did not attempt to control assessments, nor did it attempt to fix the amount of revenue to a prior period such as earlier petitions in Baltimore, Talbot and Anne Arundel with which the state court found fault. In 2009, the last time the tax rate was 38 cents, the town of Ocean City received record revenues. Since the petition does not fix revenues to a prior period, it is not a rollback.”

In late June, Ocean City Mayor Rick Meehan said the council’s vote on seeking declaratory judgment against the petition was merely an attempt to gain an independent opinion. Meehan said despite the number of signatures, the petition represented the opinion of just a select few seeking a tax rollback.

“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,” he said. “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.”

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.

In an affidavit accompanying the complaint filed in federal court on July 1, Christ essentially rejected the mayor’s notion the petition represents the desire of just a few. While Christ, Hedlin, Hall and Pawlukewicz, are “pro se” plaintiffs, meaning they are they only named plaintiffs in the case, Christ asserted they fairly represented all of the signers of the petition.

“As pro se people, we cannot represent our petitioners directly, however, the court may infer that the issues we raised personally are reflected among our entire list of petitioners as well as all taxpayers in Ocean City,” the affidavit reads. “Your plaintiffs in the instant action are representative of both businesses and residents in Ocean City. They are not shill plaintiffs that merely signed the petition. We all believe the petition will give relief and help to stop people from moving out, hence shrinking the tax base. We all hope the petition will prove to be stimulative to the economy, reversing the six-year downward spiral in property values, which serves as a proxy for jobs and general economic vitality.”

In his affidavit, Christ points out he and the other plaintiffs are merely looking out for the town’s best interest.

“Our petition is an effort to give relief to the lower three quintiles of the economic ladder who are being forced to flee due, in our view, to government-imposed expenses. These include taxes that result in higher prices and barriers to entry for small business initiatives,” the affidavit said.

For now, the council’s petition for declaratory judgment filed in the Worcester County Circuit Court and the OCTSJ suit seeking a writ of Habeas Corpus in U.S. District Court are on parallel courses. No hearing dates in either case have been set.