March 20, 2012 – County Executive Rick Pollitt, Director of Administration, Wayne Strausburg, and Director of Finance, Andy Mackel addressed the County Council today requesting an increase of the income tax rate from 3.1% to 3.2%. This increase is a direct result of pending school funding and maintenance of effort (MOE) legislation currently being reviewed in Annapolis.
The bills – HB 1412 and SB 848 – are of major concern to Wicomico County because it creates strict and harsh funding requirements that cannot be met without dramatic tax increases and/or severe cuts in core services. The legislation alters the reset of MOE retroactively and subjects the County to an increase in the MOE level for FY2013 in excess of $14.2 million above the current base (not including an additional $200,000 already required for FY2013). It also allows the state to intercept income tax revenue from counties that fail to make MOE and sends those funds directly to the state Board of Education. These punitive penalties would be unsustainable for the county.
"Wicomico County is being taken to task by the State for what is perceived as a failure to adequately support education funding,” said County Executive Pollitt, “While I do not quarrel with the basic concern, the impact of the proposed 'cure' far exceeds the nature of the disease. However, if we do not increase the income tax rate, the millions of dollars the State will confiscate could very well put us out of business."
Andy Mackel, in his presentation, outlined the services that would be in jeopardy without the .1% increase in the income tax rate. In order to reach $14.4 million, 100% of the budget for Corrections, States Attorney and the Circuit Court would need to be eliminated; or 79% of the budgets for both the Sheriff and Department of Corrections.
According to Mackel, no other combination of cuts in other county functions would come remotely close to equaling the amount.
Another provision in the bill that has already passed in the Senate, SB 848, allows counties that missed MOE in FY2012 and have a local income tax rate of 3.2%, to rebase at the 2012 level in FY2013 only. Wicomico County’s current income tax rate is 3.1%.
In order to allow Wicomico to retain the current FY2012 MOE base of $36.2 million and avoid the additional and recurring expense of $14.2 million, County Executive Pollitt has requested immediate action from the Council.
A decision is expected this week on HB 1412. Both bills were introduced as ‘emergency’ legislation. Therefore, they will take effect when enacted. Councilwoman Gail Bartkovich repeated Pollitt’s sentiment that the legislation was paramount to “blackmail.” The County Council, voted unanimously to accept Bill No. 2012-02, regarding an income tax increase, for first reading. Aware of the severity of the proposed legislation, the Council will vote on the County Executive’s proposal at their April 17th meeting. Again, this increase, as outlined in SB 848, is expected to help the County avoid an annual $14.2 million expense.
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