SNOW HILL – County leaders agreed this week not to grant the Town of Ocean City’s request for a tax differential.
On Tuesday, the Worcester County Commissioners voted 6-1, with Commissioner Joe Mitrecic opposed, to continue the longtime practice of providing Ocean City, and the county’s other municipalities, with an unrestricted grant in the coming fiscal year. The decision came in spite of the Town of Ocean City’s repeated requests for a tax differential, or a tax setoff, to make up for the duplication of services that occurs between the jurisdictions.
“This motion flies in the face of what the Town of Ocean City has tried to do,” said Mitrecic, who represents Ocean City. “I believe this is going to force the Town of Ocean City’s hand in going to court about this.”
According to Harold Higgins, the county’s chief administrative officer, the debate goes back to 1999. Each year Ocean City leaders have asked the county to provide the resort with some sort of tax break to make up for the services the municipality provides its residents.
“The setoff is a process whose intent is to provide relief to taxpayers,” Higgins said.
He pointed out that both Ocean City and Worcester County had hired consultants to study the issue. The county’s consultant recommended that the county lower the tax rate for resort residents and raise it for those elsewhere in the county to make up for the duplication of services.
Higgins told the commissioners Tuesday they had four options going into the coming budget process. He said the county could continue the annual grant process, issue a tax differential — by lowering Ocean City’s tax rate three cents and raising it 5.7 cents for properties outside the municipality — provide a tax rebate or enter into a memorandum of understanding to increase Ocean City’s annual grant.
“For the last six or seven or eight years, we’ve been in a recession and the county has not had the ability to address any more funds to the city,” Higgins said, “but times are changing. Things are looking better.”
Commissioner Jim Bunting asked how a tax differential would impact Ocean City’s annual grant from the county.
“You would take that down to zero,” Higgins replied.
Commissioner Chip Bertino made a motion to continue the county’s current practice of issuing grants to the various municipalities.
Mitrecic argued that Ocean City leaders had been patient and had shown a desire to work with the county to address the inequity. He said the county could come to an agreement with the municipality to gradually increase its grant. He said voting to continue the usual practice would force Ocean City to take the issue to court.
“At that point, we’ll have a judge lock us into what we have to do,” he said.
He pointed out that some counties in Maryland, such as Anne Arundel, had been required to provide tax differentials following legal decisions.
“I believe this motion is going to further the county’s difficulties with Ocean City,” Mitrecic said.
Commissioner Ted Elder said he was in favor of Bertino’s motion because there were some things that were not taken into account in the tax differential studies.
“It’s like nailing jello to a wall,” he said.
Examples, he said, included jail costs and the fact that because of Ocean City, Worcester County was considered one of the wealthiest counties in the state when it came to education funding.
“The Town of Ocean City, if they want to have good faith, shouldn’t bully the county,” Elder said. “This is a rift. I don’t think Ocean City should be doing it.”
Mitrecic said jail costs were in the study. While he admitted Ocean City did have an effect on the amount of state education funding Worcester County received, he said resort residents funded 56 percent of the education budget for just 350 students who reside within Ocean City.
“Ocean City pays its way,” he said. “Ocean City has been coming here and asking for this for 18 years. They’ve been asking nicely. It’s time to move forward one way or the other.”
Elder replied that the county had granted millions to Ocean City through the years, even during the recession.
“To come now when things are just starting to break loose I don’t agree with,” he said.
Commissioner Bud Church said he thought Ocean City had been patient in the process.
“We have to admit Ocean City is the goose that lays the golden egg,” he said. “We need to address their concerns.”
Church said, however, that he’d hate to burden the county’s taxpayers with an increase. He instead advocated for additional grant funding for the resort.
“I don’t want to burden the rest of the county with a tax increase either,” said Mitrecic, adding that there were other ways of addressing the situation. He pointed out there could be changes in the room tax or food tax. “There are a lot of different things that can be looked at.”
Bunting said the only option he would consider would be a true tax differential.
“Just giving Ocean City extra money does not help that property owner paying for the duplication of services,” he said.
The discussion ended with a 6-1 vote to continue the annual grant practice.