Ocean City To Pursue Legal Action Against County Over Tax Issue

Ocean City To Pursue Legal Action Against County Over Tax Issue
Council Candidates

OCEAN CITY — Resort officials on Tuesday took their first step toward pursuing legal action against Worcester County after the County Commissioners summarily rejected the town’s tax differential request earlier in the day.

On Tuesday morning, the County Commissioners voted 6-1, with Commissioner Joe Mitrecic, who represents Ocean City, opposed to reject the resort’s latest request for tax differential, or a tax set-off, to offset the cost of duplicated services provided by both jurisdictions. Hours later, during Tuesday night’s meeting, the Mayor and Council moved forward with the first step to pursue legal action against the county to resolve the issue that has been debated for decades.

After learning the County Commissioners had again voted down the town’s request for tax differential or a tax set-off for this year on Tuesday, a clearly exasperated Mayor and Council voted unanimously on Tuesday night to consult with legal counsel to begin to pursue possible litigation to resolve the issue once and for all. Although he had emailed the video segment of the Commissioners’ action to the Mayor and Council earlier on Tuesday, Mitrecic appeared at Monday night’s meeting to deliver the bad news in person.

“The County Commissioners took a final vote today, and for all intents and purposes that puts an end to any discussion on tax differential this year,” he said. “They will consider your requests at budget time, but there will be no more discussion of tax differential or tax set-off. I leave it up to you to decide where this goes next.”

In December, the Mayor and Council submitted its annual tax differential request to the county seeking relief for resort taxpayers for the double cost of duplicated services. Each year, Ocean City seeks tax relief in the form of a set-off for services duplicated by the two jurisdictions and essentially paid for twice by the resort’s taxpayers.

There appeared to be a détente of sorts on the long-standing and often contentious rift last year when the County Commissioners at least acknowledged the tax differential issue after receiving the results of their own independent study prior to budget deliberations last spring. In addition, County Administrator Harold Higgins sat in on a Mayor and Council discussion on the tax differential issue last year signaling a further thaw in the decades-old debate. However, that apparent thaw refroze on Tuesday when the commissioners essentially shot down the town’s latest request during a discussion in which one commissioner characterized the town of Ocean City as the bully in the debate.

“It was disheartening to watch the video and be accused of being a bully,” said Councilman Dennis Dare, who has been on the front lines of the debate for years as the former city manager for the town. “The real bullies in the room were the Worcester County Commissioners saying there will be no more discussions. Their own report says there should be a tax differential or a tax set-off, but from some of the comments by the commissioners today, I don’t whether they don’t understand it, or don’t want to understand it.”

Dare urged his colleagues to take the next step toward pursuing possible legal action against the county over the tax set-off issue.

“I make a motion we meet with our legal team to advise us on what our options are moving forward,” he said. “I’m totally convinced we are going to move forward. They’re not going to adversely affect their constituents to do the right thing. It’s clear to me a person in a black robe is going to need to resolve this.”

In 2013, the Mayor and Council commissioned a study conducted by the Municipal and Financial Service Group that identified roughly $17 million in duplicated services provided by the resort. Last year, the County Commissioners commissioned their own tax differential study that determined resort taxpayers were indeed paying more than their fair share for duplicated services. The county’s study, conducted by Tischler-Bise, concluded the county property tax rate for Ocean City residents should be around 74 cents per $100 of assessed value, while the rate for property owners in the county at-large should be around 82 cents.

While the difference between Ocean City’s study on tax differential and the county’s subsequent study are significant, the county’s study at least acknowledges there is some merit to the resort’s annual tax differential request and provided a jumping-off point for further meetings on the often fractious issue. However, those meetings never came as the commissioners voted on Tuesday to strike down the town’s request for tax differential, or in the alternative, a tax set-off.

Councilmember Mary Knight on Tuesday night acknowledged Mitrecic’s efforts on behalf of the town, but pointed out after watching the video just how nonchalant the rest of his colleagues appeared on the issue.

“I’m frankly surprised at just how cavalier everybody was with this, except Joe, of course,” she said. “With some of the comments made, it was entertaining, but very disheartening.”

The commissioners on Tuesday voted to continue the current practice of issuing a grant to the town of Ocean City in lieu of tax differential. In the current fiscal year, that grant totals around $3.8 million, but falls short of the roughly $17 million prescribed in Ocean City’s own independent study. Other options on the table included issuing a tax differential, which would lower the county property tax rate by about three cents per $100 of assessed value for resort property owners and offsetting the revenue loss by raising the property tax rate in the county at-large by nearly six cents. Another option included the county issuing a tax rebate to Ocean City in the form of a direct payment to the town for providing certain programs or service. Finally, a fourth option would have included a Memorandum of Understanding in which the county would gradually increase its annual grants to the town to reach the difference. In any case, Councilman Wayne Hartman on Tuesday questioned whether there was any wiggle room in the county’s final decision on Tuesday.

“Being an optimist was there any discussion of lowering the county tax bill for our residents?” he said. “One of their stated options was giving us more money to offset the difference.”

Mitrecic said County Commission President Jim Bunting essentially shot down any proposal short of continuing the current grant program.

“Commissioner Bunting said he wasn’t interested in raising your grant money because that wouldn’t go to the taxpayers,” he said. “He is under the impression it goes right into your general fund.”

Mitrecic said his colleagues’ vote ended any more discussion of tax differential for this year.

“Basically, it’s dead in the water,” he said. “The Town of Ocean City can show up at budget time with its hat in its hand like it does every year, but there will be no more discussion of tax differential.”

Ocean City Council President Lloyd Martin said recent discussions with the commissioners on the tax differential issue appeared to signal a willingness to at least explore the options further, but Tuesday’s vote ended that.

“At one meeting, they all nodded their heads and acknowledged there was a discrepancy,” he said. “To have them just vote it down with no more discussion is disappointing to say the least. Joe, we thank you for your efforts, but we’re not finished with this yet.”

Mayor Rick Meehan, who has been at the front of the tax differential battle with the county for decades, said on Tuesday the commissioners were disingenuous when they agreed to open discussions on the issue, singling out Bunting specifically.

“I’m extremely disappointed with this,” he said. “We sent the letter requesting more discussions and I thought President Bunting would have honored that promise. Instead, they just voted it down without any more discussion…. I think it displays a pompous attitude. I’m not sure they truly understand just what tax differential is.”

Like his colleagues on the council, Meehan pushed for exploring legal options on the tax differential issue.

“This is not something that we’re just going to let pass,” he said. “We’ll be following up and moving forward. It’s unfortunate that the county commissioners forget that Ocean City residents are also Worcester County residents.”

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.