County, city still far apart on tax grants

By Brian Gilliland

Staff Writer

(March 27, 2015) The effort has gotten more traction than it has in recent years, and a meeting between resort officials and the county commissioners to discuss options is all but inevitable. Still, the goalposts have moved on what both parties think an acceptable end to Ocean City’s tax differential request would look like.

“I think what we want to try to do is establish what we would consider to fall under the tax differential. There’s a little bit of disagreement and we’re working to resolve a difference of opinion,” Ocean City Mayor Rick Meehan said this week.

During the annual budget request session between the municipalities and commissioners earlier this month, Ocean City passed on the standard presentation of specific requests for departments and threw all its weight behind a two-pronged approach. Either grant the resort a differential for $17 million in duplicated city-county services, according to an Ocean City funded report completed in 2013, or adopt a memorandum of understanding to increase its unrestricted grant gradually, as a percentage of tax revenues, for the next five years.

County Administrator Harold Higgins said in reports to the commissioners that the cost of duplicated services ranged between $2-$3 million, before revising that number down to $1.3 million after Ocean City’s presentation.

“I’m not sure we picked the best year for it,” Commissioner Joe Mitrecic said, “We’re looking for some equity, and it is what it is. Ocean City is after the formula and we’re not asking for a straight differential.”

The commissioners are under no obligation to accept either request, but generally use the presentations as a jumping off point for budget talks.

“I hate to say it because it’s kind of a star, but we’re being punished by having Ocean City. It’s a gem and it’s a star but financially it’s a burden for the rest of the county,” Commissioner Ted Elder said.

Elder pointed to the Board of Education as an example. Because of the high property values incorporated into the state’s funding formula, Worcester County covers the majority of the Board of Education’s budget, to the tune of 55.8 percent of county revenue.

Neighboring counties such as Wicomico and Somerset get about 70 percent of their budget from state funds and 20 percent from their counties. In Worcester, that ratio is reversed even though, according to the state’s own numbers, 44 percent of Worcester’s 6,274 students receive free or reduced lunches, as a measure of income.

Income does not equal county wealth, as the state’s projected wealth per pupil in Worcester County is $1.1 million based on property values. Worcester also spends the most in the state per student, exceeding $17,000 each.

Cutting the wealth number in half would still put Worcester County in the top four wealthiest counties per pupil in the state.

“It’s not a possibility. There are too many other things we have to consider. To agree to a differential is out of the question,” Board Vice President Merrill Lockfaw said.

Meehan disagrees.

“The county has been using a large amount of money from Ocean City for years, which put the county in the position to depend on it. That’s their political reality and it puts them in a difficult situation. It’s not our decision — it’s theirs,” he said.

Board President M. Jim Bunting is willing to concede a bit to Ocean City’s argument.

“There is a duplication of services, and the board has changed where there were never enough votes to do anything before. I’m trying to decide what’s fair,” he said.

Even granting Bunting’s point, other commissioners are hesitant to act upon it.

“It’s definitely not [the $17 million] they say it is and it may not be what we think it is. We’re going to have to come to common ground,” Commissioner A. Chip Bertino said.

To accomplish this goal, time, tactics and talking appear to be the silver bullet.

“It’s going to take subtle negotiation to get to the win-win everyone wants. I hope cooler heads prevail,” Commissioner J. Bud Church said.

In spirit, Meehan agrees with Church.

“We realize this is a difficult issue for the city and county. We want to ensure the revenue dispersed to all the municipalities is equitable. Every taxpayer should get the same percentage returned,” he said.

Commissioner Diana Purnell did not respond to requests for comment.

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