The Town of Chestertown has not received a tax offset or grant-in-aid from the Kent County Commissioners since 2014 due to budget restraints, but the county’s budget this year includes a grant-in-aid of $70,000 to be split among Kent’s municipalities.
Chestertown will get the biggest share of $42,250. Other allocations to municipalities: Betterton $4,400, Galena $3,800, Millington $2,600 and Rock Hall $16,900.
The news was welcomed by Chestertown Mayor David Foster as he acknowledged the grant-in-aid at Monday’s council meeting.
Foster said the town should get more but this was nevertheless a good first step.
“Not as much as we would like to have or what we feel we deserve…but it’s clearly headed in the right direction after getting zero for the past several years,” Foster said.
Foster said the state legislature defines an offset or rebate as a “tax differential.”
The differential is a rebate on property taxes town residents pay the county for services like police, street cleaning and planning & zoning, which the town provides and pays for out of its own budget. The differential exists in the vast majority of counties in the form of a lower county tax rate to town residents or a direct cash payout to the municipality, but not in all cases.
Kent is one of three counties in Maryland that does not provide a differential to its municipalities.
In the absence of a differential over the years, the Kent Commissioners had maintained that they provide support for services that benefit Chestertown in a manner that would equal or exceed an annual payment of a differential. The commissioners also maintained that some of these services are above and beyond what other counties provide their municipalities.
In addition to a grants-in-aid to the towns, the county passed a one-cent property tax decrease that will reduce the general fund by $315,000.
With the grant-in-aid and the property tax rebate the general fund will be reduced by nearly $400,000.
The county also cancelled the annual 4 percent increase in county water and sewer bills this year, which reduces the general fund balance by roughly $90,000.
Kent County Commissioner Ron Fithian said he voted for all the overall budget because of many positive things in it, but expressed concern about funding a grant-in-aid when the county is currently faced with $20 million in general obligation bond debt and future expenses to replace the county’s aging middle school in Chestertown. He also said there were unknown expenses that will be mandated to the counties under the Kirwan Blueprint for education.
Fithian is concerned that these future obligations will make it difficult to maintain the property tax cut and annual grant-in-aid payments to the municipalities.
Kent County Commissioner President Tom Mason said it was important to give something back to property owners this year and provide a grant-in-aid, considering all the help businesses received to survive the COVID-19 pandemic. He said it may not be possible every year to provide the grants because of new obligations on the horizon.
“It will be our intention to provide something for the towns every year but future budget years may not guarantee it,” he said in an interview on Tuesday. “It will be a case by case basis each year.”
Mason echoed Fithian’s concerns about future obligations that could make grants-in-aid cost prohibitive.
“We do not know what Kirwan is going to do,” he said. “So we don’t want to mislead anyone that the grant-in-aid will be every year.”