Frederick County and Two Municipalities Agree on New Property Tax Differential

Two municipalities in Frederick County, Frederick City and Myersville, reached agreement with the county to change the mechanism used to compensate these municipalities for providing services the county would otherwise need to provide for these residents.  Both municipalities opted for the tax differential approach, instead of receiving a tax rebate.  A tax differential occurs when the residents within a municipality have a reduced property tax rate.  A tax rebate is a direct grant to a municipality for providing services that are similar to county services.

As reported by Gazette.Net:

The change comes in the form of a different method for calculating the annual “rebate” the county gives the city for duplicative services, such as public safety, planning, roads and parks and recreation.

Instead of the tax equity formula traditionally used for calculating the rate, the city has opted for a tax differential. The differential lowers the county tax rate so that the city can increase its own taxes to make up the difference, eliminating the need for an annual rebate from the county.

Frederick city and Myersville chose the differential at a meeting between the county and municipalities Thursday night. The rest of the county’s 10 municipalities opted to stay with the tax equity formula, which is based in part on population and miles of roads.

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