Wicomico tax policy, County Executive system need serious review

By Robert B. Taylor
Posted 3/23/21

Action by Wicomico County over 20 years ago continues to profoundly affect the government and citizens. It’s past time to reconsider whether and how those consequences should be addressed. …

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Wicomico tax policy, County Executive system need serious review

Robert B. Taylor.
Robert B. Taylor.

Action by Wicomico County over 20 years ago continues to profoundly affect the government and citizens. It’s past time to reconsider whether and how those consequences should be addressed. Hopefully, the current Charter Review Committee will exercise due diligence for that purpose by considering the circumstances discussed below.

In 1999, after years of failure to raise sufficient revenue to accommodate (and underfunding) real budgetary needs, the County’s property tax rate and amount were increased by about 25 percent. Public reaction was rapid and adverse; by amendment of the County Charter in 2000, it resulted in the property tax revenue limit (“cap”) that remains with us.

Additionally, there was a short-lived 1 percent real estate transfer tax, paid only if a property is sold, that was rescinded by referendum after several months. Consequently, Wicomico is now the only Maryland County with a property tax cap that does not have a local real estate transfer tax, being one of only five of the 23 counties and Baltimore City without such a tax.

Cecil County, with about the same population as this County and a 0.5 percent transfer tax, collects about $1.5 million per year. With a similar rate, the revenue here would be about the same; with a 1 percent rate (as in Anne Arundel, Garrett, Harford, Howard, St Mary’s and Talbot counties) the annual transfer tax revenue would probably be about $3 million in most years. Repealing the transfer tax in 2000 has resulted in substantial (at least $40 million to $50 million) lost revenue – more than enough to pay for the new sheriff’s office facility, for which the county plans to borrow about $20 million (part of its total cost), and improve roadway and school infrastructure.

Due to lost tax revenue largely because of matters mentioned above, as its necessary expenditures have increased Wicomico County has become dependent on the “disparity grant” provided to “poor” counties and other state funding to balance the budget and maintain an appropriate reserve fund.

And now the county is seriously considering waiving the property tax to subsidize the developers of “large-scale” residential projects, possibly for many years, under the “Horizon Program.”

But there is significantly more to the continuing saga caused by that big property tax increase over 20 years ago.

About 15 years ago, those who successfully sought the property tax revenue cap were instrumental in having the Charter amended to implement the elected County Executive form of government, arguing that also would prevent higher expenditure and taxation. This notion is fatuous – the tax revenue cap is why the budget and taxes have not increased more than has occurred since then.

However, the elected executive system has resulted in both public and untold tension between the elected executive and County Council and, more significantly, blatant disregard of the charter and other repugnant conduct by a former executive. In essence, for Wicomico County the elected executive system is inherently detrimental to the public interest.

Of nine Maryland counties that have an elected executive, Wicomico County has nearly the least residents, currently about 105,000. Seven of these counties have more than 250,000 residents; four have over 500,000. Most have much greater wealth and per capita tax and total revenue. Those factors alone may explain why an elected executive is inappropriate for Wicomico County.

Regardless of the underlying reasons, our experience with an elected executive makes clear beyond dispute that the County should return to the system in which the “executive” part of the County government is managed by a hired administrator. Called the “council-manager system,” that’s how two charter counties (Dorchester and Talbot) as well as the 12 Maryland counties, including Worcester, that have no charter (and Sussex County) very successfully operate.

Nationwide, most counties including the larger ones, do not have an elected executive system, as shown by data compiled by the International City/County Management Association. The main basis asserted by proponents of an elected executive – cost-effective government – is just as possible, if not more so, under qualified, competent administration retained by the legislative body (i.e., the County Council).

In recent years, there has been clamor by a certain faction to end the county’s tax revenue cap. Discontinuing the elected executive system and retaining the tax cap (possibly, with some change) to prevent runaway taxation and spending would be much more prudent. And reinstituting the real estate transfer tax is a “no-brainer” that can be done promptly without amending the Charter.

Robert B. Taylor served as legal counsel for the Wicomico County Council until recently resigning. Previously, he was in private legal practice for many years, during which a significant part involved local governments in counties and towns on Maryland’s Lower Eastern Shore.