MML Not Backing City’s Request For Double Tax Legislation; Change Would Likely Reduce Taxes For Ocean City Property Owners
OCEAN CITY – The city was once denied the request of a tax differential from Worcester County by the Maryland Municipal League (MML), leading officials to schedule a discussion for future action.
At the conclusion of Tuesday afternoon’s Mayor and City Council work session, Councilman Joe Mitrecic announced the city had received correspondence from the Maryland Municipal League (MML) regarding Ocean City’s Legislative Action Request (LAR) to receive relief from Worcester County through a tax differential. This was the fourth request made by Ocean City.
“They are not going to take up our cause for a tax differential,” said Mitrecic, asking for the matter to be placed on a future work session agenda for further discussion.
MML Legislative Committee Chairman Michael Bennett submitted to Mayor Rick Meehan by letter, the MML Legislative Committee met twice in August to consider 12 LARs received from member municipalities and departments. The Committee voted to recommend one proposed legislative priority issue to the league membership — full reinstatement of municipal Highway User Revenues (HURs) in the fiscal year 2015 state budget.
Bennett, furthered, following a robust discussion on the double taxation issue that spanned both committee meetings in August and based on the fact that effective double taxation legislation has failed repeatedly in the past, the committee recommended that, in lieu of proposing double taxation legislation in 2014, it was felt MML should use this year to develop a strategy to address the issue.
It was noted that some municipalities would suffer financially if the legislation as proposed by the double taxation workgroup were to move forward. The committee felt strongly that additional time was needed to outreach to MML’s membership and the counties to ensure that a proposed solution would truly address all municipal concerns fairly and not unintentionally cause harm to those cities and towns currently receiving a double taxation rebate or differential.
According to Bennett, the committee voted to adopt a double taxation strategic initiative to ensure the issue is fully vetted in the coming year. The strategy for the double taxation initiative will include interaction with affected local and statewide stakeholders in an attempt to resolve the longstanding inequity in Maryland. The initiative will also include a public information campaign to include outreach to candidates running for state and local offices in 2014. The committee will evaluate the success of this initiative before the 2015 legislative session to determine whether legislative action is advisable at that time.
“One thing we have always stated with our requests for tax differential, or some better formula in receiving money back from the county for services we provide that they provide other municipalities, we have always stated that we are not looking to see anybody else lose any money. They would still certainly have the option to give the other municipalities in Worcester County grants. We are not asking to take money from anybody else. We are just asking to have money returned to Ocean City,” Mayor Rick Meehan said on Tuesday.
The mayor added that just because MML has decided not to pursue Ocean City’s request, it doesn’t mean Ocean City can’t pursue follow-up action. Ocean City may have to consider partnering with other larger municipalities in the state in moving forward, he said.
A Tax Differential Study was recently conducted by The Municipal & Financial Service Group (MFSG) to come up with the potential impact a tax differential would have on the Ocean City’s taxpayers.
According to the study, Ocean City has based its requests for a tax differential on the rationale that certain county services and programs were neither available nor provided to Ocean City residents by the county because Ocean City provided those same or comparable services and programs to its residents.
In the past, Worcester County has been reluctant to grant the city’s requested tax differential and has instead responded with a variety of grants. However, these grants only offset a small fraction of what the tax differential would be, based on the fact that Ocean City constitutes almost 60 percent of the assessable real property tax base in Worcester County yet receives a disproportionately small share of county services and programs.
MFSG identified several county services or programs that are not offered to, provided to and/or utilized by the town and its residents, such as the Worcester County Tourism, Public Works, Recreation, Emergency Services, Fire Marshal’s Office, Development Review and Permitting, the Sheriff’s Office and Environmental Programs.
Based on the assessed valuation of real property tax in Ocean City and in the remainder of Worcester County, MFSG calculated the “real” property tax rate for the entire county and a supplemental tax rate for those portions of Worcester County exclusive of Ocean City.
MFSG’s analysis indicated that for FY 2013, Worcester County will need to collect $119,678,288 in property tax revenue. MFSG analysis indicates that $102,531,947 of the property tax collected should be paid by all county residents including those in Ocean City, but that $17,146,341 in property taxes should not be paid by Ocean City tax payers. Using that figure, 77 cents per $100 countywide property tax rate would be 68 cents for Ocean City and 95 cents for the remainder of Worcester County.