OCEAN CITY — Defeated but not disheartened at the federal level, a group of Ocean City taxpayers last week filed suit in Worcester County Circuit Court as expected seeking a roll-back of sorts in the property tax rate in the resort to 2009 levels.
In June, a group operating under the guise of the Ocean City Taxpayers for Social Justice submitted to the Mayor and Council a petition containing nearly 1.500 signatures validated by the state Board of Elections essentially seeking a return of the property tax rate in the resort from the current 48 cents per $100 of assessed value to 38 cents, or the rate at which it was set in 2009. The petition sought 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 petition organizer Tony Christ in Worcester County Circuit Court seeking a judicial review of the validity of the petition and its attempts to launch a referendum. Anticipating the Mayor and Council’s move at the Circuit Court level, Christ along with three other named plaintiffs, including John Medlin, Herb Pawlukewicz and former Ocean City Councilman Joe Hall filed a complaint in U.S. District Court seeking a habeas corpus hearing at the federal level. Essentially, the four named plaintiffs were not confident the petition to return the tax rate to the 2009 level would not get a fair shake in Worcester County Circuit Court.
Initially, U.S. District Court Judge Richard Bennett consolidated the town of Ocean City’s petition for judicial review and the OCTSJ’s request for emergency removal of the case to federal court into one action. Earlier this month, however, Bennett ruled favorably on Ocean City’s motion to dismiss the federal case and remanded it back to Worcester County Circuit Court. The judge ruled moving the case to U.S. District Court in hopes of a more favorable outcome did not justify the move from Worcester County Circuit Court.
“The plaintiffs have not alleged that the state court would not hear their case, nor have they alleged any cognizable deprivation of their right to a fair trial,” the federal judge’s opinion reads. “The bare assertion of a violation of due process based on the supposed application of unfavorable state court precedent does not state a cause of action sufficient to avoid a motion to dismiss. The plaintiffs mistake what is constitutionally required, a fair trial, for what they desire, a favorable judgment.”
The temporary setback at the federal level did not break the petitioners’ spirit, however. As expected, Christ and the named plaintiffs filed a complaint in response to the Mayor and Council’s original petition for declaratory judgment, essentially reopening the case at the Worcester County Circuit Court level. While not entirely confident in a favorable outcome at the Circuit Court level, Christ said this week he hopes the mere filing of the new complaint keeps the tax rollback issue front and center for several more months.
“Basically, we want to keep it alive until the next election,” he said. “Next week begins an election year, and we’re hoping to keep it alive so the voters can decide at the polls. As long as I am able, I’m going to keep this alive.”
Christ asserts the Mayor and Council have consistently raised the property tax rate in Ocean City behind the shield of constant yield, which sets the tax rate at a level needed to sustain the same level of service for residents and visitors as the prior year.
“We’re not saying they don’t have a right to raise taxes,” he said. “Just don’t hide behind constant yield. They have comingled constant yield with raising taxes for so long, people just assume it is right. If the politicians want to raise taxes, that’s their right, but just stand up and say it.”
The new 31-page complaint filed this week is chock-full of complex case law, but boiled down to its simplest terms, the message is consistent. The complaint asserts steadily rising tax rates have stifled property values and caused an exodus of sorts of many residents to the detriment of the resort and ultimately its bottom line.
“It is the defendants’ earnest belief that this level of stimulus is needed to reverse a flat to downward trend in property values in Ocean City for almost eight years,” the complaint reads. “It is your defendants’ earnest belief, confirmed by lower tax revenues, that faulty constant yield adjustments since 2005 have resulted in flat or lower property values and lower tax revenues since 2009.”
Lowering property tax rates, not raising them, will increase property values, the complaint asserts.
“Governments aren’t behaving prudently when they increase the rate of taxation at the expense of revenues caused by declining assessments,” the complaint reads. “Defendants believe tax revenues are maximized at lower rates, not higher rates. Defendants believe such a rate reduction will stimulate the economy and will increase assessments in future years, resulting in more tax revenue.”