Chestertown Taxes to Increase in FY 2019

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Town Manager Bill Ingersoll (second from left) explains Chestertown’s FY 2019 budget as Mayor Chris Cerino (left) and council members Linda Kuiper and David Foster listen.

Chestertown’s taxes are about to go up.

A tax ordinance introduced at the May 21 council meeting would, if passed, raise real estate taxes by $.05 per $100 assessed value. That would amount to an increase of $100 for a property with an assessed value of $200,000. The current town rate of $.037 per $100 value has not seen an increase since 2003, said Town Manager Bill Ingersoll.

The increase in town taxes would be in addition to any increase in county taxes, which are determined independently by the county commissioners. (At this point, the county budget is still being worked out.) Ingersoll said the alternative to the increase would be diminishing the town’s commitments and services, a reduction the town does not want to make.

Ingersoll introduced the tax ordinance and a companion ordinance setting water and sewer rates, which are scheduled to increase by 9.4 percent as well. A public hearing and council vote on the Fiscal Year 2019 budget are scheduled for the June 4 council meeting. If passed, the budget would go into effect July 1, the beginning of the town’s fiscal year.

A draft FY2019 budget obtained by the Spy shows anticipated revenues of $6,053,131 versus expenses of $6,043,737. Property taxes are expected to account for $2,578,603 of the revenue, with federal and state grants contributing just over $2 million more. State income tax revenue contributes another $650,000.

The three largest categories of expenses are capital outlays of $2,153,187; public safety at $1,804,915; and public works at $1,286,733. General government is $535,318.

The capital outlay, much of which is to be funded by grants, is primarily for work to upgrade the town-owned marina. $150,000 is set aside for street repairs. “That’ll get us started on some of the more severe problems,” he said.

Ingersoll said he had asked Kent County to consider a tax differential for town residents, in view of the town’s providing services such as police protection that the county, therefore, does not have to pay for within town limits. The county, in the past, provided as much as $116,147 in tax differential to the town, but the practice ended in 2014. Ingersoll said he was told by county personnel that the differential was “on their radar,” but he did not have any assurance that it would be reinstated.

“It’s been a tough year for trying to match revenues with expenses,” Ingersoll said. He said the tax increase was “absolutely necessary. We started our budget with no (funds for) capital improvement whatsoever.” He said the council had “tightened our belts” during the recession that began in 2007, hoping for increases in the assessed property values that had not materialized. He said he had given the council a chart that shows “almost a flat line” in the value of property within town. “I think anyone can see how conservative we’ve been, living within our means,” he said, adding that it was out of consideration for “the plight that people were in for 10 years.”

Town Manager Bill Ingersoll

Ingersoll said there was evidence that the real estate recovery “is happening,” with higher house prices beginning to come in. The new business park being installed by KRM Development behind the Washington Square shopping mall would eventually add a significant amount to the tax base, but it would be a while before the benefits were realized. “So there needs to be a little bit of patience, but I think the horizon looks good,” he said.

Ingersoll said the water and sewer increases would not include an increase in water and sewer tapping fees, which will remain at $4,000 each. “We don’t want to stop the pace of improvements and infill in Chestertown,” he said. He said the council had postponed any capital improvements in the utilities department.

Ingersoll said there had been a number of requests for funding by non-profits that the council had to cut out this year. Ingersoll said it was disappointing that the town had had to decline requests to fund “regulars” that it had supported for a number of years. “We don’t think that’s going to be forever. This year is just the confluence of some factors that we thought would have totally recovered by now.”

Cerino said “This was probably the toughest budgeting year that I’ve sat through, and we actually cut a lot of our discretionary spending. We just can’t afford to do that right now. We’ve had flat revenue for ten years, and expenses ticking up every year. We’ve had to make some hard decisions.” He said it was “really tricky” when organizations come and ask the town for funding, because it sets a precedent every time the town grants funding to a nonprofit. “It was one of those years where we just had to say no to a lot of worthy organizations.”

Councilman David Foster said that none of the cuts were based on a determination that a given organization was not worthy. “It was the financial need of the town,” he said.

The budget will be discussed in detail at the June 4 public hearing, at which point questions from the public will be entertained. Copies of the proposed budget will be available in town hall before that meeting.

At the beginning of the meeting, Councilman Marty Stetson questioned the minutes of the May 15 budget workshop held by the council. He said the minutes indicated that Councilwoman Linda Kuiper had voted with him in opposition to the $0.05 tax increase, which passed 3-2. However, he said, when he asked Kuiper after the meeting how she had voted, she said she didn’t vote. He asked whether the vote had been changed after the meeting was closed, which he said would be improper. He said council members were allowed to abstain, but it should not be for a political reason.

Stetson said he would, in the future, ask for roll call votes on substantive matters.

Kuiper said she thought she raised her hand in opposition to the proposed increase. She said she did not remember telling Stetson she didn’t vote.

Town Clerk Jen Mulligan said she had transcribed the minutes that day and heard Kuiper say the vote was 3-2, with her and Stetson opposed to the increase. “Anybody can hear the tape,” Mulligan said.

In the vote to approve the minutes, Stetson voted not to accept the May 15 budget workshop minutes, which were approved 4-1. There was no discussion about the minutes of the May 7 council meeting or the May 8 budget session, which were both approved unanimously.

The meeting ended a few minutes after 8:00 pm.

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Letters to Editor

  1. Jenn Baker says:

    Our town has made tremendous strides in economic development in every free or low cost way possible – on top of funding a marina – with the same amount of funds since 2003. Think about the number of things you buy that costs the same as it did 15 years ago. Every utility cost has risen, salaries have gone up, healthcare has gone up, the cost of every single form of daily operations has increased. In order for us to improve the streetscape, strengthen our quality of living, and solidify economic vitality of our community we need to contribute a little more. We’ll get it back – we’ll see it in our beautiful streets, bustling downtown, and rising home values. If we can do as much as we have done at the same budget level for 15 years, think about how much more we can do with a few extra hundred dollars per homeowner in the years ahead.

    Huge thanks to our town for being good stewards of our taxes and keeping them flat for so long while giving us so much more.

  2. Bill Arrowood says:

    Any good discussion should begin with the participants understanding the basic details and costs.
    To whit: the Town Budget
    http://townofchestertown.com/mdocuments-library/financial-statements/2018-budget/
    This is the public document, its a little soft in details, but at least gives you an understanding of what things cost.

    Raising taxes is a necessary part of life, but assuring how those increases are to be designated is key to moving forward.
    There are also numerous other paths that the Town and County can create to generate revenue and not discourage business and increased residency.
    Among them are the creation of a business improvement district, neighborhood improvement districts (https://law.justia.com/codes/maryland/2010/economic-development/title-12/subtitle-4/12-403/and accessing the cottage rental businesses, (like AirBNB/ VRBO) with the HOT tax that is applied to registered hotels and Bed & Breakfasts, (http://www.montgomerycountymd.gov/Finance/Resources/Files/data/taxes/ROOM_RENTAL_INFORMATION.pdf) , that would allow fund to be focused on category and location specific improvements.
    An increase in property taxes at the local level can be softened for long term and senior residents so that they may either apply for incremental increases or a flattening of their rates also keeps from hurting residents that may see the increase as beyond their means.

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