Resort Seeking Talks With County On Tax Differential

OCEAN CITY — While Ocean City’s appeal of a ruling in the controversial tax differential issue continues to run its course, town officials this month extended an olive branch of sorts to Worcester County for continued discussions in the coming months.

A Worcester County Circuit Court judge in October issued an order granting the county’s motion for summary judgment in the civil suit filed against it earlier this year by the Town of Ocean City over the tax differential issue. Shortly thereafter, the town filed an appeal the case at the state’s Court of Special Appeals.

In the meantime, Ocean City Mayor Rick Meehan earlier this month sent a letter to the Worcester County Commissioners requesting an open dialogue on the tax differential issue in the weeks or months leading up to the next budget cycle. For years, Ocean City has requested tax differential from the county in the form of a tax setoff, or a county tax rate for property owners in the resort different from the tax rate paid by residents in the county at-large.

The reasoning is the property owners in Ocean City already pay taxes to support certain services and programs, such as police and emergency services, recreation and parks and public works, for example. These are services the county does not necessarily need to provide in the resort. Each year, Ocean City requests the tax setoff from Worcester County and, for the most part, the request is denied each year. Instead, the county makes unrestricted grants to the resort for a variety of uses in an attempt to offset the cost of tax differential.

After years of veiled threats, Ocean City last January filed a petition for declaratory judgment against Worcester County seeking judicial relief on the long-standing tax differential issue. In October, a Worcester County Circuit Court judge ruled in favor of the county and against Ocean City on the most salient aspect of the suit, and Ocean City quickly filed an appeal with the state’s Court of Special Appeals.

While that appeal continues to make its way through the court system, the town has again reached out to the Worcester County Commissioners seeking an open dialogue on the tax differential issue heading into the next budget cycle. While former overtures have often been adversarial, the tenor of Mayor Rick Meehan’s letter sent to the commissioners earlier this month seeks a mutual agreement on the tax differential and encourages the two entities to work together on a mutually-beneficial solution.

Meehan’s letter references a pair of studies on the tax differential commissioned by both entities that each agreed there should be some resolution but differed widely on the actual amount of tax setoff that should be afforded to Ocean City taxpayers.

“The Worcester County study on tax differential in 2016 concluded that Ocean City taxpayers should receive a differential, although the amount of tax differential did not agree with the amount that Ocean City identified in its study,” the letter reads. “There have been meetings in the past with town and county staff members, but they did not determine a mutually agreeable model to formulate a fair tax differential.”

Meehan’s letter suggests the two local governments work together to resolve the issue once and for all. However, the letter is quick to point out rapid development of hotels in West Ocean City that benefit from the town’s marketing and advertising efforts.

“We hope this year’s discussion will be more productive,” the letter reads. “We share many common interests as we both represent the citizens and taxpayers of Worcester County. The development of over 600 hotel rooms in West Ocean City has placed additional emphasis on the importance of the advertising and marketing we do to bring visitors to the resort area.”

The letter points to the shared interests of both entities as reason enough to resolve the tax differential dispute. For example, a shared sports complex somewhere in the county’s north end has been discussed by both parties and could provide some common ground. The majority of the former slate of commissioners was against the county being involved in the sports complex idea, but Commissioner Josh Nordstrom could see the issue differently than his predecessor and shift the majority opinion.

“The success of our local businesses is crucial to the economic success of both Ocean City and Worcester County,” the letter reads. “We would suggest this year’s discussions include ways to work together to share additional expenses and develop an economic strategy with an emphasis on sports marketing to grow our economic future.”

Partnership and not division is the essential tenor of Meehan’s letter to the commissioners.

“Building this type of partnership could be the first real step in resolving our tax differential issues,” the letter reads. “We believe working together is the future.”

For its part, the county acknowledged receiving the letter and vowed to schedule meetings between the two entities in the weeks and months leading up to the next budget cycle in a rather terse draft letter in response to the town’s request.

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.