Proposed Wicomico Tax Hike Impacts More Than Just Real Property Taxes

During his budget message on Tuesday, Wicomico County Executive Rick Pollitt proposed a $0.05 increase in the county’s real property tax rate.  This would increase the tax rate from 75.9 cents per hundred dollars of assessed value to 80.9 cents, a 6.59% increase.  However, if adopted, this proposed rate increase would also impact two other taxes paid by Wicomico County businesses.

All businesses in Wicomico County pay a personal property tax.  This tax, set by Maryland law, is 250% of the real property tax rate.  Each year businesses file a return with the county and pay the tax based on the depreciated value of all plant, property, and equipment.  This includes furnishings and office equipment.

Some businesses do qualify for a personal property tax exemption for the purchase of new manufacturing equipment.  All such exemptions have to be approved by the county council and are contingent upon the businesses adding to their workforce.

Some Wicomico businesses also pay an inventory tax.  While we were not able to confirm this, Wicomico County is reported to be the only county in Maryland that assesses a personal property tax on inventory.  The rate is the same as the personal property rate and is based on 35% of the value of the inventory.

In a conversation with Pollitt on Monday evening, he explained that the proposed rate real property rate increase was a necessary and a by-product of the revenue cap.

“Over the past several years, we have seen the rate go down because of the cap.  Now, if we want to attempt to maintain the same level of services, the tax rate has to go up.”

Many citizens, and some members of the county council, have already expressed concern about the proposed rate increases.  Because the personal property rate is tied to the real property rate, concern has been expressed regarding a potential impact on local employment and economic growth.

We called Wicomico Finance Director Pat Petersen to get an explanation of the personal property tax system.  While explaining the system she also noted that, because the personal property rate was tied to the real property rate, area businesses have seen a decline in their personal property (and inventory tax) bills over the past several years.

What the final tax rates will be depends on the county council.  They can accept Pollitt’s budget (with the included rate hikes) or find enough savings in the budget to remediate all or part of the proposed rate increase.