Much Is Weighing On Resort Reassessment
The State Department of Assessments and Taxation for Worcester County will be mailing out letters later this month to property owners detailing exactly how far their property values in Ocean City have declined.
The county is divided into three districts when it comes to reassessing current land values. It was Ocean City’s turn this year and this is a critical reassessment. A couple months ago, Robert Smith acknowledged values are continuing to decline but he said, “If Ocean City had been reassessed last year, the downward spike would have been even more pronounced than what we are seeing thus far this year.”
In 2008, the last time Ocean City properties were assessed, the assessed values declined by about 15 percent, after increasing in 2005 by about 75 percent.
Smith said this week the average property will see a decline of about 12 to 15 percent. That means Ocean City, Worcester County and Maryland are going to see significant declines in property tax dollars, resulting in a deficit for each of the governments to overcome through other means.
Just last month, Finance Administrator Martha Lucey outlined for the Ocean City Mayor and Council exactly how much of the city’s general fund money comes from property taxes. In the last fiscal year, approximately 57 percent was funded by property tax, with 18 percent stemming from other taxes such as room tax 4 percent from capital and operating grants and contributions and 4 percent of other revenues including investment earnings.
According to Lucey, due to declining property values from the 2008 reassessment, property taxes brought in $42.6 million in fiscal year 2011, which was a 2.8-percent decline from 2010.
If the 15-percent decline in assessments is realized, Ocean City will be starring at a deficit of approximately $6.4 million.
When Smith’s office puts the reassessment notices in the mail this month, it’s going to be bad news for local governments, but just how dreadful is the question.
Once the amount is realized, the hard work begins for government officials in the budget process, as once again the easiest fix -- a property tax rate increase -- should not even be considered.
It would be inappropriate in these challenging times, and government officials must get on the same page and toss this concept aside in the early part of the budget process. With a property tax rate increase removed as an option, the hard work will truly begin.