Ocean City property owners are now receiving their assessment notices and discovering first hand what happens when a real estate market basically collapses.
Three property owners we spoke with this week saw annual decreases in property values of 2 percent, 7 percent and 11 percent. One property owner saw an increase of 4 percent because his property was part of a new construction project.
With approximately 95 percent of Ocean City’s 35,000 tax accounts registering a decline in land values, it stands to reason they will be paying less in taxes. That assumption is founded on the premise that the property tax rates will not be raised by Ocean City, Worcester County, which has made it clear no taxes will be raised, and the State of Maryland. If the tax rate is raised, there’s a chance property owners could pay as much or more in property taxes, depending on the individual scenarios and the scale of the tax increase.
It would be unfair for any government to pitch tax increases in their proposed budgets next year. The state increased a bunch of taxes earlier this year, proving legislators have no idea what’s happening to residents in their state. Local officials understand the pinch residents are feeling, and they would be committing political suicide if they suggested any kind of tax increase to help balance their budgets.
In Ocean City, City Council members seem committed to at least holding the same property tax rate in 2009, and some have even suggested it needs to be lowered to the constant yield tax rate, which would bring in the same amount of tax revenue as last year.
In a way to keep council members informed during their holiday break, we understand City Manager Dennis Dare sent a couple news articles recently to council members detailing how some jurisdictions in the mid-Atlantic are handling tremendous revenue shortfalls. It’s worth pointing out unless Ocean City raises its property tax significantly it will be facing millions of dollars in lose revenue because of the declining assessments, and that’s why the town has been making cuts and scrambling to get expenses down in recent months. There will be more of the same in the coming months.
One article from the Washington Post was headlined, “As Property Values Plunge, Tax Bills Might Not Follow.” The article details how some counties, such as Prince William in Virginia, is considering a 16-cent property tax rate increase because assessments have dropped so dramatically.
There is no question government officials are leading in tough times. Spending cuts are the responsible thing to do. Raising the tax rate in any fashion, even if it does not mean an individual property owner would pay more in taxes, would be cold, selfish and shortsighted. It’s not an option and the sooner that’s confirmed by all area governments the better.