SALISBURY, MD – After demanding that a special meeting be called because of “new information”, Wicomico County councilwoman Stevie Prettyman changed her original vote (from last Tuesday’s meeting) and the Bennett Middle School project will now move forward. While the county’s budget will not be passed until June, the actions of Prettyman and council members John Hall, Matt Holloway, and Sheree Sample-Hughes lock the county government into a hike in the real property tax rate as well as personal property taxes paid by businesses. In addition, the county’s debt load will be increased by approximately 40%.
In remarks prior to her vote, Prettyman stated that there had been speculation as to her vote in local blogs and on the website of the Daily Times but that when she arrived at yesterday’s meeting she had not decided how she would vote. The meeting was called at Prettyman’s request (with the concurrence of Hall, Matt Holloway, and Sample-Hughes). Prettyman stated that her reason for calling the meeting was because “new information” was available:
This morning when I walked in here I was not quite sure where I was going to stand on this issue. With everything that I’ve said I do support sending the letter … but I do think there needs to be a lot more work on (the project) and I hope those involved keep that in mind.
The “new information” was that the project could be financed by bonding new monies in FY 2013 rather than in later years. However, this was not “new information”. Bonding new money was always an option and county Finance Director Andy Mackel had even offered that option at the previous meeting. Prettyman claimed that this “new information” allowed for the financing of the new school without “going around the charter”. That claim, however, had been put to rest last week when Council Administrator Matt Creamer explained that monies already borrowed could be used, in compliance with the charter, by the passage of two legislative bills. The county’s bond counsel and county attorney had also concurred that there were no legal impediments to using funds already bonded if the counsel so desired.
TAX HIKE NOW REQUIRED
While this measure was adopted by a resolution, the effect of yesterday’s vote will be to require council to adopt a seven cent increase in the real property tax rate when the budget is adopted. The increase in the real property rate will have a negligible impact on the average homeowner’s property tax bill. However, businesses which pay the personal property tax will see an increase of almost 10% in their personal property tax bills. Businesses with large investments in plant and equipment could see an increase of thousands of dollars. If those businesses hold large amounts of inventory, their personal property bills could rise thousands more. Wicomico County is the only county in the state with taxes inventory.
No one knows what impact this will have on the county’s FY 2013 budget. While the dollar cost of bonding new monies can be estimated, until County Executive Rick Pollitt submits his budget in April it is unknown what cuts will be required in areas other than education. Pollitt has already committed to funding Maintenance of Effort (MOE) in the FY 2013 budget.
With the legislature currently meeting in Annapolis, there remains the possibility that at least 50% of the cost of teacher pensions could be forced onto counties. Additional cuts in state funding are also on the table as Maryland governor Martin O’Malley is proposing a hike in the income tax and the sales tax. An increase in the state’s gas tax is also on the table in this session.
Cuts in state funding, coupled with Pollitt’s commitment to funding MOE for county schools could lead to drastic cuts in other county services such as public safety. Because almost all of the required tax hike will be earmarked for debt service, none of those funds can be used for neglected areas such as road repair.