Ocean City Tax Rate Suit Headed To Fed Court; Resort Appealing Ruling

OCEAN CITY — The battle over the property tax rate petition in Ocean City will be heard in federal court after a judge last week ordered the town’s case against the Ocean City Taxpayers for Social Justice (OCTSJ) be removed from Worcester County Circuit Court and consolidated with a concurrent civil case filed by the plaintiffs in U.S.  District Court.

In July, OCTSJ organizer Tony Christ filed a request in U.S. District Court for the emergency removal of the Town of Ocean City’s Circuit Court case in Worcester County to the federal level, asserting the property tax rate issue as it relates to the constant yield should be considered a federal question because the alleged arbitrariness of the tax rate change falls under First Amendment and Fourteenth Amendment violations. Essentially, the OCTSJ argues the case should more appropriately be heard in federal court because it doesn’t believe it would get a fair hearing at the local level.

Last week, U.S. District Court Judge Richard Bennett concurred and ordered the town’s petition for declaratory judgment against the OCTSJ to be removed from Worcester County Circuit Court and consolidated with a OCTSJ’s existing case against the town filed in U.S. District Court on July 1. In simpler terms, the town’s action against the OCTSJ filed in Worcester County Circuit Court, and the OCTSJ case against the Mayor and Council filed in U.S. District Court, which were proceeding on parallel paths, will now be consolidated into a single federal case.

“It is hereby ordered that the plaintiffs’ request for emergency removal of Maryland Circuit Court cases to federal District Court shall be construed as a notice of removal,” Bennett’s order reads. “The clerk of court is directed to open a new case based on the plaintiffs’ notice of removal and to consolidate this new case with an above-captioned case.”

By way of background, in May, a group of concerned property owners in the resort affiliated with OCTSJ 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 that raises the property tax rate two cents to 47.8 cents.

In simplest terms, the OCTSJ is seeking a return to the 2009 property tax rate of 38 cents per $100 of assessed valuation, asserting the increase in the rate over the years has forced many to leave Ocean City to neighboring jurisdictions with lower tax rates and has stifled the growth of small business in the resort forced to pay higher property tax rates.

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 and need.

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 within 90 days of its filing, or the next scheduled election, which would be November 2016.

Early in July, the Mayor and Council filed a petition for declaratory judgment against the OCTSJ and Christ in the Worcester County Circuit Court seeking a judicial review and attempting to halt the petition for referendum at the local level.

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, 10 days earlier filed a complaint in U.S. District Court seeking a Habeas Corpus hearing at the federal level. The four plaintiffs were not confident the petition to return the tax rate to the 2009 level will not get a fair shake in Worcester County Circuit Court.

Last week’s ruling by Bennett at the U.S. District Court level has been appealed by the city. Christ said this week he is working on an answer to that appeal and he hopes to have it complete this week.

“The city is trying to crush us and I am doing my best without being an attorney to stay up on the filings and see this through,” said Christ. “The city is spending a lot of money on these filings. The most recent development is a request to make our group hire an attorney, which we cannot afford to do. It’s just a few of us.”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.