FEDERALSBURG, MD - A property tax increase could be on the horizon for residents of Federalsburg in Caroline County. The town Federalsburg has proposed to increase real property tax rates from $. 88 per $100 of assessment to $. 94 per 100 of assessment.
Earlier this year, town leaders hinted at the possibility of this increase. Homeowners have expressed concerns about where the additional revenue will go and whether they will be able to afford to stay in their homes.
"I might have to sell my house, and I ain't got no place to go," said Tony Cronin, a homeowner worried about rising costs and the impact on his family and neighborhood.
New resident Lyonel Green also finds the news troubling. "It's kind of getting annoying because we thought we were moving to a town where the taxes were less and we could get buy better and manage better," Green said.
Town officials have not yet responded to requests for comment on the proposed tax increase. Meanwhile, Federalsburg is also facing a lawsuit settlement of up to $260,000 to the ACLU of Maryland. In April, Mayor Kim Abner indicated to WBOC that a tax increase might be necessary to cover these payments.
Mayor Kim Abner wrote, "The lawsuit led to a settlement after the historic election that, among other things, requires the Town to pay the ACLU of Maryland over a quarter million dollars in legal fees, which is about four times as much as what the Town spent on legal fees resulting from the suit. The Mayor and Council are proud of the successful overhaul and improvement of the election system and their other efforts to promote racial equity. They remain committed to continuing inclusion and growth in Federalsburg. However, they wish that they could have utilized the funds that will be paid to the ACLU to support further growth and improvement within the community. Instead, they are faced with the reality of a tax increase to their residents to fund these payments and they wish that the process they started prior to the lawsuit could have reached its conclusion without the litigation."
While the town has not confirmed this as the reason for the proposed increase, residents have their own ideas about how the additional revenue should be used.
"The side streets are all terrible. They keep patching them and patching them," said Virginia Ott, a resident.
"I think it should go towards the parks because it's the local parks I take my dogs to all the time," Green suggested.
"If we have to pay it, [the money should] go to the schools," Cronin added.
More discussions on the proposed tax increase are scheduled for the next Federalsburg Town Council meeting on June 10.
UPDATE: The town of Federalsburg sent WBOC this statement Friday afternoon:
Municipalities often find themselves in the position of needing to raise taxes for several critical reasons. Primarily, taxes are the most significant source of revenue for most local governments, accounting for over 70% of their general revenue.
This funding is essential for covering the costs of public services such as infrastructure maintenance, public health (safe water and sewer and trash), and public safety. When it comes to infrastructure, specifically paving roads and repairing aging infrastructure, the costs can be substantial, and the funds from taxes ensure these projects can be completed without compromising other vital services. Part of the Town of Federalsburg’s problem is that in July, 1965, the sitting Mayor and Council took on an additional 1.62 miles of state roads. Later correspondence from 1990 shows it was in exchange for the maintenance of the East Central Avenue bridge. Current highway user funds (HUR) that we receive from the state are used to pay a road bond that was taken out over 10 years ago to pave roads in Town.
Additionally, municipalities may incur debt to finance large projects and unfunded state mandates or to cover unforeseen expenses, like our recent settlement and attorney’s fees with the ACLU costing over $300,000. Raising taxes can be a method to manage this debt responsibly and avoid fiscal shortfalls. Furthermore, as economic realities evolve, the tax system may need to be updated to reflect current values and ensure fair and equal treatment across the community. In essence, raising taxes can be a necessary step for a municipality to maintain and improve the quality of life for its residents by ensuring that essential services and infrastructure are adequately funded and managed. The Town currently has approximately $4 million dollars in debt. This includes loans dating back as far as 1995 for water and sewer infrastructure, roads, upgrades to the wastewater treatment plant (WWTP) and new water tower, and upgrades/renovations to the Police Public Safety Building. Some of these loans will be paid off over the next few years and the Town should see a substantial drop in debt by 2028-2029.
In our case, taxes have not been raised since 2019 and water and sewer rates have not been raised since 2017. As the cost of goods and services rises to keep up with inflation, so must our taxes and water and sewer rates. While the Mayor and Council did not arrive at this decision lightly, we all felt it was necessary for the survival of our Town. We promise to review these numbers throughout the year and adjust where we can for the next fiscal year. We are working with staff to be good stewards of money while acquiring goods and services that we need for our day-to-day operations. We look forward to a more prosperous day when we can provide all the resources and quality of life activities our residents deserve.
