This will elaborate upon my comment at the County Executive’s public meeting on March 10 about raising the additional revenue that’s required to appropriately fund both the Board of Education and other necessary expenditures in the County’s next (FY2026) budget. Among other things, as she explained, the County now subsidizes both the airport and the Civic Center, which are no longer self-sustaining, and now must fund things that the State has funded in the past.
According to Ms. Giordano, to cover the total expenditure without substantially depleting the County’s reserve funds, additional revenue is required. The pressing issue is how to raise what is needed. Some and the Greater Salisbury Committee have suggested that the additional revenue should be generated by eliminating the County’s real estate tax revenue limit (“cap”). However, because that can only be done by amending the County Charter, it would not resolve the issue in the County’s next budget. What can be done is the question.
At present, Wicomico is one of just five of Maryland’s 24 counties and Baltimore City that do not impose a county property transfer tax when real estate is sold, the only other Eastern Shore jurisdiction being Somerset County. In Cecil, Kent, Queen Anne’s, Caroline, and Worcester Counties, the transfer tax rate is 0.5% of the sale price ($500 on a $100,000 sale). In Dorchester County it’s 0.75%, and 1% in Talbot County. Wicomico County is the only jurisdiction that has a mandatory limit of its real estate tax revenue but does not impose a property transfer tax.
The transfer tax can be variable. For example, in Harford County, its 1% property transfer tax is waived on part of the sale price of a home to be owner-occupied; in Anne Arundel County, the tax is progressive: 1% up to a $1 million sale price and 1.5% if the price is greater than that.
To estimate the potential revenue that the transfer tax would generate, consider that in FY 2023, the revenue generated by Wicomico County’s recordation tax (0.7%) was $5,422,844; it was $ 6,061,058 in FY2022. Although data for last year (FY2024) is still unavailable, it can be reasonably estimated that at the 0.5% rate, the property transfer tax would generate at least $2.5 to 3 million in most years and more if the tax rate were the same as the higher property transfer tax rates in Dorchester County and Talbot County.
It appears that the County can impose the tax by passing an ordinance (no referendum or state legislation needed).
Regarding the Property Tax Revenue Cap
The following is from section 5-104 of the Education Article of the Maryland Code:
(d) (1) Notwithstanding any provision of a county charter that places a limit on that county’s property tax rate or revenues … a county governing body may set a property tax rate that is higher than the rate authorized under the county’s charter or collect more property tax revenues than the revenues authorized under the county’s charter for the sole purpose of funding the approved budget of the county board.
This provision, which allows the County Executive and Council to override the property tax revenue cap, was adopted by the General Assembly in 2012. Since then, Talbot County has used it to impose a tax rate above that required to comply with its property tax revenue “cap,” upon which Wicomico County’s revenue cap is modeled. Overriding the property tax revenue cap to generate additional revenue to fund the schools would have the same general effect as if the revenue cap had been repealed.
SUGGESTION
Realistically, the County’s property tax revenue cap won’t be either significantly modified or repealed - in either case, a referendum to amend the County’s Charter is required - and it is unlikely that the voters would approve anything more than a minor change. Thus, the means to obtain the necessary additional revenue, both in FY2026 and thereafter, are the property transfer tax and the override of the property revenue cap pursuant to state law.
The property transfer tax would generate additional revenue that can be used for any purpose, whereas that generated by a special property tax override is restricted by the state law to “the sole purpose of funding the approved budget” of the Board of Education. Separately or together, these means are available now to balance the County’s next and subsequent budgets. The transfer tax revenue would reduce if not eliminate having to override the property tax revenue cap.
What’s needed is leadership and action, not more palaver about eliminating the property tax revenue cap.
The Council and the County Executive should reach a consensus about generating additional revenue before the proposed FY2026 budget is submitted by the Executive. They should also discuss eliminating both currently lost revenue - starting with repeal of the property tax waiver to subsidize the investors in the Ross rental facility - and further unnecessary expense or waiver of revenue such as that to subsidize an airline to fly from here to Florida.
Of course, expenditures such as the recent appropriation to beautify the Civic Center should be completely avoided in the future.
Robert Taylor
Salisbury resident
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
