St. Michaels will hold a virtual public hearing Wednesday night on a proposed $3.5 million budget that includes a cut to the property tax rate and a smaller reduction in marketing spending than originally suggested.

The Fiscal Year 2022 budget, proposed by St. Michaels Commissioner Tad DuPont and introduced by Commissioners David Breimhurst and Mike Bibb, would set the property tax rate at 49 cents ($0.49) per $100 of assessed value. The town’s current rate is 52.4 cents ($0.524) per $100.

DuPont, selected by the town commissioners as treasurer, said during a May 4 budget work session that the commissioners are elected by town residents and “it’s their interest that we need to look after.

“They’re the ones that pay significant portion of the bills, and it’s our duty to ensure public continuity and safety and look after their interest, as well as everybody else’s,” he said.

He said the budget was a compromise, with departments being adequately funded, but not getting everything they wanted.

“We listened to public works. They got most of what they asked for but they didn’t get it all. We listened to the police department. They got a lot of what they wanted, they got what they needed, but they also didn’t get everything that they’d like to have. The same thing happened with the administration office. They got some of what they wanted, but they didn’t get it all,” DuPont said.

“The other thing that we’ve been able to accomplish in this budget is we’ve been able to separate the water department…. The water department will stand on its own and it will be able to pay off its debts in roughly three years. The way it currently is budgeted, it will be approximately $71,000 to the plus … this year.

“So that all being said, I feel that the commissioners have done a great job in trying to balance everybody’s needs, everybody’s wants, including the taxpayer,” DuPont said.

Using the current rate and a projected tax base of $307.6 million, the town would have collected $1,611,824 in property taxes. The proposed 49-cent rate will bring in $1,507,240, reducing the town’s revenues by about $100,000.

With the lower rate, property owners would save $34 on a $100,000 property, $68 on a $200,000 property, $170 on $500,000, $340 on $1 million, $1,700 on $5 million, and $3,400 on a property valued at $10 million.

The minimal savings to individual taxpayers while the town commissioners are debating $50,000 in spending prompted Commissioner Jaime Windon to oppose the tax cut during a May 4 budget work session.

“A few weeks ago we had a kind of a general philosophical discussion about some people are of the mindset that we should always be working to reduce taxes and so that’s an admirable goal if that’s what your end result is.

“The problem for me and the reason that I’m so resistant to it after you know trying to look at it from all angles — and I promise you I have — is that it’s just that cut just doesn’t amount to that much for the individual taxpayer, even those who own a massive amount of property,” she said.

“And I just feel that we’re still debating hotly $5,000, $10,000, $20,000 decisions — which I’m not saying we shouldn’t debate every fiscal decision that comes before the town — but until we’re in a place where we have more than enough money to make all of those decisions that make this town a town that we’re all proud to live in, and that we all feel is thriving, then I don’t … personally feel motivated to make a tax cut, which is why I’m opposed to it,” Windon said.

Commissioner David Breimhurst said the budget included “safety valves” and “we’re still in the midst of a pandemic,” with restaurants required to maintain six-foot distancing.

“So, if worse comes to worse and things do look like they’re going down the drain, we still have the reserve and the ability to kick in,” he said. “(W)e’ve done a lot of hard work on this budget and it’s been painful … because we’ve really … sliced and diced it every which way we possibly can. And we’re trying to give something to everyone and if it’s three cents for the taxpayers, that’s great.”

The most controversial issue in the budget had been a proposal to cut the marketing spending from the $140,000 originally proposed to $40,000.

The money for marketing and advertising comes from two revenue sources — the accommodations tax and the amusement and admissions tax. The biggest portion comes from the accommodations tax, which is paid by guests staying at hotels, B&Bs, inns, and short-term rentals.

St. Michaels typically has used about 75% of the revenue from those two taxes to pay for town services related to tourism, including trash pickup and police. The town has used the remaining 25% for advertising and marketing and the $140,000 in the initial draft budget was about 23% of the expected accommodations and amusement taxes for FY22.

During the May 4 budget work session, numerous business owners spoke against any cuts to the marketing budget.

Kim Hannon, president of the St. Michaels Business Association, noted “the money that is used for advertising is from the accommodations and amusement tax…. (T)he accommodations tax and amusement tax is paying for this. So … if you cut that, you’re basically biting off the hand that feeds you. It just doesn’t make any sense to do that.”

Restaurateur Chris Agharabi said St. Michaels residents and businesses depend on tourism and the town should be spending more on marketing, not less.

With a budget of $3.5 million, the town is spending about 2.5% on marketing, much lower than the recommended 7 to 8%, he said.

“So, yeah, we’re all gonna save a couple hundred bucks on property tax, whoop-de-do. A couple hundred dollars. Terrific. Why don’t you take that money (and) put some flowers in front of my building that I paid for?” Agharabi said. “So get a grip, get control of your $3.5 million budget, think a little bit, stop worrying about two cents on $100 and do something productive ….”

The budget as introduced during that meeting provides nearly $91,000 for marketing, about 15 percent of the $610,000 revenue expected from the accommodations and amusement taxes.

The proposed budget includes another $64,000 reserved for marketing and/or trash services. If half of that reserve is approved for marketing during the fiscal year, the total spending for marketing would be $123,000, about 20 percent of the expected revenue from the two taxes.

The virtual meeting using Zoom begins at 6 p.m. Wednesday, May 12. If you have not used Zoom, please take a few minutes to download the free app to your computer or smart phone prior to joining the meeting.

Join meeting by computer or smart phone by clicking link below:
https://us02web.zoom.us/j/3264261778
Meeting ID: 326 426 1778

Join by phone with audio only:
1-301-715 8592
Meeting ID: 326 426 1778