Mayor & City Council of Ocean City v. Comm'rs of Worcester Cnty.
| Decision Date | 13 October 2020 |
| Docket Number | No. 2751,2751 |
| Parties | MAYOR AND CITY COUNCIL OF OCEAN CITY, et al., v. COMMISSIONERS OF WORCESTER COUNTY, MARYLAND, et al. |
| Court | Court of Special Appeals of Maryland |
Circuit Court for Worcester County
UNREPORTED
Opinion by Friedman, J.
*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. MD. RULE 1-104.
This case concerns the constitutionality of the tax setoff laws contained in Sections 6-305 and 6-306 of the Tax-Property ("TP") Article of the Maryland Code. These tax setoff laws divide Maryland's counties into two main categories: in the first category are 8 counties in which the county must provide municipal residents with a tax setoff; and in the second category are 14 counties in which the county may, at its discretion, provide municipal residents with a tax setoff.1 Ocean City is located in Worcester County—one of the counties in the second category that may, but is not required to, give municipal residents a tax setoff. For at least the last several years, Worcester County has, however, refused to give Ocean City a tax setoff. To avoid this outcome, Ocean City challenges the constitutionality of these tax setoff laws pursuant to Article XI-E of the Maryland Constitution, which broadly compels the General Assembly to treat municipalities uniformly. For the reasons that follow, we hold that because the tax setoff laws do not relate exclusively to local affairs, they do not violate the uniformity requirement of Article XI-E, §1.
Ocean City is the largest municipality in Worcester County, Maryland. Taxpayers in Ocean City pay property taxes to both Ocean City and to Worcester County, but receive governmental services mostly from Ocean City. To compensate its taxpayers for this tax differential, Ocean City sought a tax setoff from Worcester County. Worcester Countydeclined. Ocean City then filed suit seeking a declaration that the tax setoff laws are unconstitutional because they treat different municipalities differently. Worcester County moved to dismiss the complaint or, in the alternative, for summary judgment. Ocean City cross-moved for summary judgment. The circuit court found that the tax setoff laws are not "special or local in [their] terms or in [their] effect" relating to the government or affairs of municipal corporations under Article XI-E, § 1 of the Maryland Constitution and are therefore constitutional. Ocean City noted a timely appeal.2
The problem of tax differentials is not a new problem. Almost 50 years ago, in Griffin v. Anne Arundel County, Judge John P. Moore3 of this Court described what was by then already a longstanding problem. 25 Md. App. 115, 120 (1975). In 1959, the General Assembly created a commission to "study problems of City-County fiscal relationships," including:
a study of possible tax differentials between the city and town residents whereby town residents might get lower county tax rates in consideration of the fact that many of theirgovernmental services are provided by the town and not by the county. There is currently no consistenc[y] among the several counties in Maryland as to the bases for county tax differentials for residents of incorporated municipalities and/or rebates by the various counties to the incorporated municipalities therein.
J. RES. 26, 1959 LEG., 351ST SESS. (Md. 1959). After a four-year study, the Commission concluded that the problem of tax differentials "was not amenable to any 'single solution and that any possible solutions would have to be developed on a County-by-County basis.'" Griffin, 25 Md. App. at 121 (quoting REPORT OF THE COMMISSION ON CITY-COUNCIL FISCAL RELATIONSHIPS 12 (Dec. 1963)). Judge Moore also discussed a 1970 Report by the Committee on Taxation and Fiscal Affairs of the Legislative Affairs of the Legislative Council of Maryland. Griffin, 25 Md. App. at 121-25. That Committee Report declined to recommend a statewide tax differential system, instead finding that "because of the variation in the types of governmental services provided by the local governments that determination of the countywide nature of a service can only be made at the county level and not at the state level." Griffin, 25 Md. App. at 124 (quoting the 1970 Committee Report).4 Following those recommendations, the General Assembly in 1975 adopted the predecessor to the current tax setoff laws, requiring tax setoffs in some counties, but exempting others, including Worcester County. Acts of 1975, Ch. 715. In 1978, the General Assembly adopted a reporting system, which requires the Department of LegislativeServices "to conduct an annual review on the progress5 of counties in establishing tax differentials and to report [its] findings at the close of each fiscal year."6 See Acts of 1977, J. Res. No. 31. Since the late 1970s, while the number of counties in each category has changed and the process by which municipalities apply for and receive tax setoffs has become more complicated, the general framework has remained consistent.
Today, as noted above, Maryland's counties are generally divided into two categories: 8 counties in which the county must provide municipalities a tax setoff, and 14 counties in which the county may, in its discretion, provide municipalities a tax setoff.7 In Allegany, Anne Arundel, Baltimore County, Garrett, Harford, Howard, Montgomery, and Prince George's—if a municipality "demonstrates that it performs services or programs instead of similar county services or programs," then the county "shall" grant a tax setoff to the municipal corporation, which is to say, the existence (but not the magnitude) of the tax setoff is mandatory. TP § 6-305(b), (c).8 If, on the other hand, the county is not listedin TP § 6-305(b), but the municipality "demonstrates that it performs services or programs instead of similar county services or programs," then the county "may" grant a tax setoff to the municipal corporation, which is to say, the tax setoff and its magnitude is optional. TP § 6-306(c).9 By our calculations, for 8 counties—which include 66 municipalities—the tax setoff is mandatory; and for 14 counties—accounting for 91 municipalities—the tax setoff is optional. Worcester County and Ocean City are in the group for which the tax setoff is optional.
Except for the mandatory or optional nature of the tax setoffs, the procedures set forth in TP §§ 6-305 and 6-306 are the same and include detailed instructions for the submission of tax setoff requests by municipalities and the procedures that the county must follow in considering those requests. Specifically, municipalities are required to submit a detailed proposal for the desired level of property tax setoff. TP §§ 6-305(f); 6-306(f). Then, a meeting is held to discuss the "nature of the tax setoff request, relevant financial information of the county and municipal corporation, and the scope and nature of services provided by both entities." TP §§ 6-305(g); 6-306(g). Once the county budget has been set,each municipal corporation that has requested a tax setoff receives a "statement of intent" from the county, which includes an explanation of the level of the proposed tax setoff, a description of the process used to determine this level, and an affirmation that the municipal corporation is entitled to appear before the county governing body to discuss or contest the level of the proposed tax setoff. TP §§ 6-305(h); 6-306(h). As we understand it, the tax setoffs are most frequently structured as either a tax rebate to the municipal taxpayers or as a subsidy to municipal government.
Since before the Revolution, the Maryland General Assembly was responsible for drafting municipal charters and passing local laws concerning municipalities in Maryland. By the early Twentieth Century, however, that responsibility had become overwhelming. Governor Theodore R. McKeldin convened a "Commission on the Administrative Organization of the State" in 1952 and charged it with reducing the amount of local legislation the General Assembly was required to consider. Acts of 1951, S.J.R. 11. The Sobeloff Commission, as it came to be known after its Chair, future Chief Judge of the Court of Appeals of Maryland, Simon Sobeloff, proposed adding a new article to the Maryland Constitution granting home rule to municipalities and requiring the General Assembly to adopt legislation for municipalities by laws of general applicability, rather than on a one by one basis. LOCAL LEGISLATION IN MARYLAND: SECOND REPORT OF THE COMMISSION ON ADMINISTRATIVE ORGANIZATION OF THE STATE 25 (June 1952) ("SOBELOFF REPORT"). The result was Article XI-E.
Article XI-E of the Maryland Constitution, adopted in 1954, creates municipal home rule. This Article "grant[s] municipalities the power to legislate on matters of local concern and government" and "restrict[s] the power of the General Assembly to treat municipalities differently and to enact binding non-uniform laws affecting incorporated cities and towns." MARYLAND MUNICIPAL LEAGUE, MARYLAND'S 157: THE INCORPORATED CITIES AND TOWNS 6-7. See also Maryland-Nat'l Capital Park & Planning Comm'n v. Town of Washington Grove, 408 Md. 37, 57-58 (2009) () (quoting Inlet Assocs. v. Assateague House Condo. Ass'n, 313 Md. 413, 425 (1988)); M. Peter Moser, County Home Rule - Sharing the State's Legislative Power with Maryland Counties, 28 MD. L. REV. 327, 335 (1968) (...
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