Appeals Court Will Not Hear Tax Differential Case

OCEAN CITY — While the ongoing dispute between the Town of Ocean City and Worcester County will likely go on, a state appeals court won’t hear the case, according to an order handed down last week.

A Worcester County Circuit Court judge last October issued an order granting the county’s motion for summary judgment in the civil suit filed against it last year by the town of Ocean City over the tax differential issue. Shortly thereafter, the town of Ocean City filed a motion for writ of certiorari with the state’s Court of Special Appeals, essentially asking the higher court to take up the case.

Last week, however, the state’s Court of Appeals issued an order denying the town of Ocean City’s petition to the Court of Special Appeals, essentially ending any legal recourse for the town in the ongoing dispute over tax differential, or the cost of duplicated services provided by Ocean City that aren’t required of Worcester County. The Court of Appeals order appears as a brief, terse entry in the Worcester County Circuit Court docket.

“Upon consideration of the petition for writ of certiorari to the Court of Special Appeals, it is ordered by the Court of Appeals of Maryland that the petition be denied as there has been no showing that a review by certiorari is desirable and in the public interest,” the docket entry reads.

Last January, after years of veiled threats, the town filed a petition for declaratory judgment against Worcester County seeking judicial relief on the long-standing tax differential issue. In simplest terms, tax differential, or a tax setoff, may be granted by a county to a municipality for services and programs duplicated by the two jurisdictions.

Following a motions hearing last October, the circuit court judge ruled in favor of the county on the most salient aspect of the suit. At the heart of the issue is a portion of the state law under the Municipal Home Rule Amendment of the Maryland Constitution that designates some counties in Maryland as “shall” counties, which require those counties to provide tax set-offs for services provided or duplicated by its municipalities.

Other counties are declared “may” counties, in which tax set-offs to the municipalities are optional. The town of Ocean City argued the designation of some jurisdictions as “shall” counties and others as “may” counties was unconstitutional. On that issue, the judge ruled in favor of Worcester County and with the issuance of an order granting the county’s motion for summary judgment effectively closed the case at the circuit court level.

In terms of the apparent divide between the amount of tax differential, or tax setoffs, owed by the county to Ocean City and the annual grants to county makes to the resort, the circuit court was more sympathetic. The judge sympathized with town’s argument the annual grants from the county to the town did not offset the cost of duplicated services.

In the end, however, the constitutionality of the “shall” versus “may” argument ultimately ended the town’s attempt at a legal remedy for the tax differential issue, at least at the circuit court level. With the Court of Appeals denial last week, it appears the town’s legal remedies have been exhausted, however, Ocean City officials continue to appeal to the County Commissioners to address the issue.

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.