Ocean City Today

County receives more time to respond to resort lawsuit

Original deadline today, but request to delay until March 26 approved in Circuit Court
By Brian Gilliland | Feb 15, 2018

(Feb. 16, 2018) After Ocean City government went to court on Jan. 16 to seek a ruling on whether it had the right to a tax differential from the county, County Attorney Maureen Howarth said Worcester had 30 days to reply.

A week before the deadline, the county asked the Worcester County Circuit Court in Snow Hill to extend the deadline, which it did on Tuesday, to March 26.

Allegany, Anne Arundel, Baltimore, Garrett, Harford, Howard, Montgomery and Prince George’s counties are required to provide tax setoffs, or differentials, for similar services offered by municipalities and counties, while the rest of the counties and Baltimore City are not.

There are two operative words in the state property tax code regarding tax setoffs for duplicated services: “may” and “shall.” In legal terms, “may” refers to something allowable, but not required and anything that “shall” be done is mandatory.

According to the complaint filed by Ocean City Solicitor Guy Ayres, 19 of 23 counties that “may” provide tax setoffs have done so. The four that have not are Howard, Baltimore, Wicomico and Worcester counties. Of those four, Baltimore and Howard counties do not have municipalities.

Ayres contended that 136 Maryland municipalities receive a tax differential or tax rebate from their county. The state lists 157 municipalities in Maryland.

In lieu of tax rebates, Worcester County provides grants to its municipalities. According to Ayres’ complaint, the resort receives “a fluctuating annual amount of about $2 million.” Ayres also cites Ocean City’s internal study conducted a decade ago that determined there were about $17 million worth of duplicated services. Ayres states the county’s own study, completed in 2016, identified $7.8 million in potentially duplicated services.

Ayres uses these facts to ask the court to declare the section of code that separates the counties into “may” and “shall” subheadings to be in violation of the Maryland Constitution, in that it requires tax differential legislation “shall be in their terms and in their effect apply alike to all municipal corporations.”

Though the state allows counties to charge municipalities different tax rates based on duplicated services, it takes no position on how those policies are implemented, leaving the parties to hash out the details.

Montgomery County, for example, offers each taxpayer a credit on their county property tax, which shows up on the annual bill. In Worcester County, Howarth said, the treasurer’s department would divide the county into “taxing areas” and each area would pay a different rate based upon the location.

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