Differential Study Suggests Lower OC Tax Rate

SNOW HILL – A consultant hired by Worcester County suggests decreasing the property tax for Ocean City residents and increasing it for county residents in an effort to account for the services the resort provides.

The tax differential identified by the study, performed by Bethesda-based TischlerBise, would require reducing the tax rate for Ocean City taxpayers to $.740 and increasing it for all other county taxpayers to $.827.

“As you can see, this represents a significant departure from the way the county has historically set property tax rates,” said Phil Thompson, the county’s finance officer.

Julie Herlands of TischlerBise told the Worcester County Commissioners this week that a tax differential study identified services that were duplicated between jurisdictions, in this case the county and the Town of Ocean City, and the costs associated with those services. She said TischlerBise staff members met with county department heads to determine that $112 million in property tax revenue was required to fund the services provided to residents. That requires a county-wide tax rate of $.776 per $100 in valuation.

According to Herland’s report, of that $112 million, $101 million is needed countywide — including within the municipalities of Worcester County. Outside Ocean City, in the unincorporated county, $7.8 million in property tax revenue is required. Ocean City itself requires $3.8 million in property tax revenue.

To come up with those numbers, TischlerBise reviewed expenditures in each area of government and determined which were associated with Ocean City. For example, in Worcester County Circuit Court in FY 2014 and FY 2015, 58.6 percent of cases filed were Ocean City criminal cases. Between circuit and district court, more than 65 percent of the state’s attorney’s workload was Ocean City related.

The consultant also looked at costs and usage in the areas of recreation and culture. At the Worcester County Library, 22 percent of visitors are seen at the Ocean City branch.

Herlands said that all of the numbers in the report were reached after looking at an extensive breakdown of the county’s services.

“There’s a detailed analysis behind these rolled up results,” she said.

The tax rates of $.740 and $.827 are based on the FY 2015 budget and allow for the continuation of the county’s grants to each municipality. Ocean City’s current grant is slightly more than $3 million.

“If you were to do a tax differential, the grant would probably go away,” Thompson said.

Herlands pointed out that the proposed tax rates would be different if the county were to begin receiving highway user revenues from the state at the level it did in the past. That, she said, would set the rate at $.742 for Ocean City taxpayers and $.789 for the rest of the county’s taxpayers. She added that changes to the income tax levels could also change the breakdown.

County staff said the tax differential study was meant to provide information and would be discussed with officials from Ocean City. The rates it proposed have not been included in the budget that will be adopted next month.

“The purpose of the study was to provide comprehensive analysis from the county’s perspective which can be used as a baseline for future work sessions,” Thompson said.

Herlands offered similar comments.

“The general takeaway is you’re starting to talk about who’s paying for what and who’s consuming what services,” Herlands said. “This is a different approach than the county has done in the past.”

About The Author: Charlene Sharpe

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Charlene Sharpe has been with The Dispatch since 2014. A graduate of Stephen Decatur High School and the University of Richmond, she spent seven years with the Delmarva Media Group before joining the team at The Dispatch.