(June 22, 2018) Ocean City Councilman and Delegate District 38C candidate Wayne Hartman hesitated when pressed this week by County Commissioner Joe Mitrecic regarding state legislation supporting Ocean City’s tax differential request.
Mitrecic broached the topic while presenting a quarterly update during the City Council meeting on Monday.
“I’m hoping that Mr. Hartman, if he’s victorious next Tuesday, he’s going to put in a bill … that makes us a ‘shall’ county instead of a ‘may’ county,” he said. “If we don’t win the [tax differential] lawsuit, I fear it’s never going to go anywhere.”
After years of asking Worcester County to provide a tax differential since resort property owners pay for county services duplicated by the city, the issue landed in court in January when Ocean City filed suit in Circuit Court seeking a declaratory judgment regarding a split tax schedule.
The Maryland property tax code section concerning tax setoffs for duplicated services designates counties as either “may” or “shall.” From a legal standpoint, “may” means the decision is up to the county, while “shall” means a county must provide a differential. Worcester is a “may” county.
Failing to get a response from Hartman during his presentation, Mitrecic waited until the public comment period of the meeting to reiterate the request.
“Something’s been eating at me … when I mentioned the bill … he didn’t answer … and I was curious where he does stand,” he said.
Hartman, while noting that only about 15 percent of Maryland residents live in areas represented by municipalities, questioned if the proposal would resonate statewide.
“I don’t think it would be successful in the general assembly,” he said. “I’ve not wanted to say that publically because it gives the county an additional angle.”
The complaint filed by City Solicitor Guy Ayres notes that 19 of the state’s 23 counties grant tax setoffs. Of the remainder, excluding Baltimore and Howard that lack municipalities, the list whittles to Worcester and Wicomico. The complaint also mentioned 136 of 157 Maryland municipalities receive a tax refund from their respective counties.
“If it goes to litigation … and we’re not successful … it puts us in a really bad position,” Hartman said. “I think the best thing for us to do is move sooner than later as far as resolving this locally.”
Mayor Rick Meehan, who earlier had asked Mitrecic to broker another meeting with the county regarding the tax question, quickly countered Hartman’s assertion.
“Don’t take my request to continue to meet with the county commissioners as assuming we weren’t going to win our litigation, because I think we will,” he said. “[Still] it’s good to have that continued dialogue.”
In other business, Mitrecic reviewed the recently approved Worcester County fiscal year 2019 budget, which was passed 6-1 two weeks earlier, with Mitrecic the sole dissenting vote.
The roughly $190 million budget maintains the Worcester County’s current tax rate of 83.5 cents per $100 of assessed value, Mitrecic said.
School funding is again the largest budget expenditure at approximately $87 million, which Mitrecic said increased roughly $2.2 million because of state mandates.
“The total student funding is at $19,185 per student,” Mitrecic said. “Of which the state gives us $2,950, which is … lowest in the state.”
Mitrecic said the county continues lobbying to modify the state’s school funding formula which focuses on a county’s tax base versus its population.
“The Thornton Commission is doing a new study,” he said. “We’re hoping, once again, the school funding is not based on your wealth but some … more equitable formula that takes some of this burden off taxpayers.”
Since 2002, the Thornton Commission has overseen the state school aid formula.
“The issues is basically the $8.5 billion net assessable tax base of Ocean City [increases] the county’s wealth (per capita) astronomically.” he said.
Several fiscal requests from Ocean City were turned down by the county, much to Mitrecic’s dismay, including funding a Boardwalk safety project.
“I personally thought this was an easy homerun for the county to jump onboard and participate in a worthwhile capital project,” he said. “However, my colleagues saw it differently and couldn’t wait to vote it out.”
Although Ocean City received a 2.5 percent increase in unrestricted grants, Mitrecic said the overall tally decreased.
“The town actually gets $98,215 less this year than last year,” he said.
Councilman Matt James asked Mitrecic to confirm the county receives less state funding due to the resort’s multi-billion-dollar assessable base.
Mitrecic replied that were it not for the wealth created by properties owned by nonresidents, Worcester would be among the poorest jurisdictions, and thus one of the high-funded school districts in the state, after Somerset County and Baltimore City.
“Actually, it’s really quite an anomaly,” he said. “With Ocean City, we’re one of the richest counties in the state, without … we would be one of the poorest counties in the state.”