Budget Calls About Balancing Needs, Wants

Budget Calls About Balancing Needs, Wants

Rising property values equal more tax revenue for governments if the property tax rates remain constant. This message was featured in three stories this week about budget sessions in Ocean City, Berlin and Worcester County.

The question as governments everywhere take deep dives into their budgets is whether the additional dollars will meet the needs of governments to provide the services the community deserves. Inflation pressures, rising pay and health insurance needs for employees, maintaining infrastructure and meeting the service expectations of citizens must all be accounted for during these budget talks.

This week marked the time in the budget process when governments must decide what property tax rate to post in an advertisement, which usually starts with a message about a “proposed real property tax increase” because most governments do not reduce the current tax rate to the constant yield rate, which brings in the same amount of revenue from the previous year based on property values. It’s part of the process and oftentimes the final budget call does not jive with this required advertisement.

By keeping the tax rate the same, which is 4.4% higher than the constant yield, Berlin’s government will receive $185,000 in new revenue because of rising property values. The assessable base in Berlin is forecasted to grow from $515,257 to $537,944 for the tax year beginning July 1, 2023. The same process is playing out in Worcester County, which will stand to gain $6 million in new revenues at the same tax rate due to rising assessment. It has been learned during Worcester County’s early budget process the requests far outstrip the new tax dollars, as an $11 million deficit currently exists between revenues and expenditures. In Ocean City, a constant tax rate will produce a net revenue gain of $478,000, which is being proposed to offset new expenditures for eight new full-time firefighter/EMT positions and four new full-time cops.

Most governments do not consider a constant yield tax rate because of rising expenses and increased needs from their various departments. It’s an easy call for them at this point, but the question as the budget processes play out is whether higher tax rates are needed. It’s common in the year after elections for adjustments to the tax rate to occur. Raising the tax rate is never the preferred option, but this reluctance needs to be balanced with keeping communities safe from infrastructure and public safety viewpoints as well as maintaining a quality education system. We would not be surprised if small tax rate hikes gain favor over the coming weeks, but these decisions should involve deep analysis and cuts where possible without compromising quality of life for our community and the financial stability of our governments.

About The Author: Steven Green

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The writer has been with The Dispatch in various capacities since 1995, including serving as editor and publisher since 2004. His previous titles were managing editor, staff writer, sports editor, sales account manager and copy editor. Growing up in Salisbury before moving to Berlin, Green graduated from Worcester Preparatory School in 1993 and graduated from Loyola University Baltimore in 1997 with degrees in Communications (journalism concentration) and Political Science.