OCEAN CITY — With the dust finally settling after turbulent budget seasons at the state and local level, resort business leaders and local elected officials this week discussed the fallout with much of the blame planted squarely on the state.
The Ocean City Economic Development Committee (EDC) met on Wednesday to discuss, among other things, the fallout from the recently completed state and local budget sessions. The EDC invited Delegate Mike McDermott (R-38B) to provide a glimpse of what the special General Assembly session on the state budget meant for the resort and the Lower Shore, while County Commission President Bud Church provided a similar glimpse of the county budget, including the need for a property tax hike for the first time in years.
McDermott drew on a historic reference with dire results to explain the repercussions of the state’s budget.
“Annapolis is frustrating for me and it must be really frustrating for you,” he said. “Addressing the EDC after a session like we just had is like giving a pep talk at the Alamo. If you’re up on that wall at the Alamo and the ammo is getting light, hang in there for a better day. You have huge spheres of influence and you have to engage and involve.”
McDermott said the end result of the state’s budget is less money in the pockets of the average state citizen, money otherwise diverted to leisure pursuits so important to the resort.
“We’re so dependent upon discretionary dollars in people’s pockets,” he said. “If they don’t have money, they won’t come to the beach, they won’t stay in hotels, they won’t go out to dinner and they won’t ride rides. Perhaps more importantly, they won’t buy second homes.”
The state budget passed during the special session came after lawmakers were not able to reach an accord as the regular session. The result was a “default” budget that held the line on spending and did not include any tax hikes, according to McDermott.
“The only time we did anything right was when we did nothing,” he said. “The default budget was the best one in years.”
McDermott said one positive thing to come out of the special budget session was the loosening of straight party votes on the spending plan.
“I was heartened by the fact 18 Democrats broke ranks and opposed the budget,” he said. “That was a milestone. The only thing bipartisan was in opposition. That speaks well to us in small business.”
The Lower Shore delegate said many of his colleagues attempt to justify the budget with groundbreaking and ribbon-cutting ceremonies. He said most jurisdictions including Worcester only get a return of a small percentage of what they contribute to the state.
“Politicians in Annapolis equate success with standing in front of some project on the Eastern Shore with a big cardboard check,” he said. “The truth is, very few jurisdictions get back what they pay in.”
Meanwhile, Church addressed the EDC about the county’s budget situation and piled on the state-bashing bandwagon.
“The state shot us in the foot,” he said. “We didn’t shoot us in the foot.”
Church said the county was faced with its first tax increase in several years because of the draconian cuts handed down by the state, coupled with a shift in financial responsibility to the counties.
“This was the toughest year of all,” he said. “When I was first elected, we would have a $4, or $5 or $6 million dollar surplus, which created a different set of problems. We added money to schools, roads, infrastructure, sewer plants and we put money in reserve. We were criticized for not lowering taxes, then the world changed. Everything became upside down.”
Church said since 2009, Worcester County has endured $19.1 million in state cuts and after five years of restructuring, the county was faced with little choice but to raise taxes. With the reassessment of Ocean City, the county received $23.1 million less in property tax revenue.
“The county has been very, very prudent and we’ve done everything we can do to meet our budget responsibilities,” he said. “We went to the department heads and asked them to cut three percent, then five percent and finally 10 percent. We have given, given and given some more and we didn’t want to raise taxes, but we were left with little other choice.”
Church said a similar situation could play out next year.
“Next year, we’re expecting another $7 to $8 million drop when Ocean Pines, Berlin and the north end of the county is reassessed,” he said. “The 7-cent increase we just passed will cover that and will carry us through to 2014. Even at 77 cents, Worcester County should still have the second lowest tax rate in Maryland.”
Church added, “The tax increase equates to another $70 per $100,000 of assessed value, or $140 on $200,000 of assessed value. It’s isn’t that bad. It’s something we can live with.”