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OCEAN CITY ­ The Mayor and
City County granted approval to
submit a Legislative Action Request
that would move the town forward in
possibly receiving relief from Wor-
cester County through a tax differ-
ential that comes to about $17 mil-
lion.
According to City Manager David
Recor, in 2012 Maryland Municipal
League (MML) Legislative Commit-
tee Chair Bruce Williams formed an
eight-member workgroup to exam-
ine double taxation in Maryland and
present findings and recommenda-
tions to the committee and MML
membership.
The current law divides munici-
palities into two groups, one group
that may provide double taxation re-
lief to municipalities and one group
that shall provide relief.
ately small share of county services
and programs.
The study explains, using Wor-
cester County's adopted Fiscal Year
(FY) 2013 budget as a starting
point, MFSG categorized county
services into two classes. First are
those programs and services that
are available and provided to Ocean
City residents, and second are
those services and programs that
are not available or provided to
Ocean City residents.
MFSG identified the costs related
to each program and service. MF-
SG documented any programs or
services that were partially available
or provided to Ocean City residents
and documented the basis for allo-
cating the budgeted expenses relat-
ed.
MFSG identified several county
services or programs that are not
offered to, provided to and/or uti-
lized 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 coun-
ty and a supplemental tax rate for
those portions of Worcester County
exclusive of Ocean City.
MFSG's analysis indicates that
for FY 2013, Worcester County will
need to collect $119,678,288 in
property tax revenue. MFSG analy-
sis indicates that $102,531,947 of
the property tax collected should be
paid by all county residents includ-
ing those in Ocean City, but that
$17,146,341 in property taxes
should not be paid by Ocean City
taxpayers.
That $17,146,341 is therefore the
expense amount that calculates the
tax differential of $0.269, which ad-
justs the $0.770 countywide proper-
ty tax rate to $0.687 for Ocean City
and $0.956 for the remainder of
Worcester County.
"This is something the council
can support that would benefit all of
our taxpayers, and something that
we have pursued a number of
times. I have actually been before
the committee a couple of times
presenting this to them and trying to
get them to take this as an initiative
of the MML unsuccessfully but it
looks like at this point in time we
have a better chance to get that to
move forward," Mayor Rick Meehan
said. "As citizens and taxpayers, if
we all want to work together on
something ... this is what we should
be working on together. This makes
a difference. This is something we
need to do and we need to pursue,
and I think everybody should get
behind it as it would really benefit
our taxpayers."
The council voted unanimously
to authorize the completion of a
2014 MML Legislative Action Re-
quest on behalf of the town support-
ing the workgroup's recommenda-
tion.
ty real estate taxes. Ocean City has
based its requests for a tax differen-
tial 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.
Ocean City's requests are sup-
ported by several studies prepared
by the Institute for Governmental
Services (IGS) that found duplicat-
ed services in the areas mentioned
above. Worcester County has been
reluctant to grant the city's request-
ed tax differential and has instead
responded with a variety of grants.
However, these grants only offset
a small fraction of what the tax dif-
ferential should be, based on the
fact that Ocean City constitutes al-
most 60 percent of the assessable
real property tax base in Worcester
County yet receives a disproportion-
The workgroup recommends that
MML pursue legislation that will
delete provisions that divide groups
and impose the same standard so
property tax setoffs are applicable
to all counties.
According to the workgroup's Fi-
nal Report, the proposal would a-
mend current law to provide that no
county may impose a property tax
on municipal property owners to pay
for services that a municipality pro-
vides.
In Ocean City's case, a Tax Dif-
ferential Study was conducted by
The Municipal & Financial Service
Group (MFSG) to come up with the
potential impact a tax differential
would have on the town's taxpay-
ers.
According to the study, on an an-
nual basis the Town of Ocean City
meets with the Worcester County
Commissioners for the purpose of
requesting a tax differential of coun-
OC Supports Legislative Action On Tax Differentials
Page 26
July 5, 2013
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