Ches. Beach raises tax on gambling

Mayor denounces decision

Wednesday, June 17, 2009

On Monday, Mayor Bruce Wahl responded with a press conference, saying he considers the amendment to be in violation of state law and wrote a letter to the state's comptroller advising him of the town's decision.

After the 4-2 vote for the amendment, Wahl said Monday he did not veto the amendment because that would have jeopardized the FY 2010 budget and government services. He is not able to veto line items, only the entire budget at once. At the meeting, Wahl said, "We're setting ourselves up for a legal challenge. We don't have the legal basis," adding that it would cost the town in a possible lawsuit.

Council member Pat Mahoney, who said he has worked with government contracts for 35 years, initiated the amendment to raise the amusement (gambling) tax on bingo machines .25 percent, saying that this year's Maryland General Assembly House Bill 193 states that the town cannot raise the tax on net proceeds, but it does not mention raising taxes on gross revenue, which is how the taxes are currently based by the town.

The quarter of a percent would add $250,000 in revenue, Mahoney said. The town's current tax rate is a half of a percent.

Mahoney talked about HB 193 which granted a three-year extension to Rod 'N' Reel Restaurant, Traders Seafood Steak and Ale Restaurant and Abner's Crabhouse in Chesapeake Beach as well as establishments in Anne Arundel County.

Mahoney also spoke about the letter written to Del. Sue Kullen (D-Calvert) by Assistant Attorney General Kathryn Rowe who said it was her opinion that the bill would prevent the town from raising the rate of the tax.

"I respect the opinion, but it's just an opinion," Mahoney said, adding that even the assistant attorney general said, "It's murky."

"Whatever loophole there possibly is, it'll get closed next session," council member Ingrid Lamb said, urging the council to vote for the increase in this budget last Thursday.

Wahl looked at the letter differently, saying, "The advice of the assistant attorney general, in my mind, is a clear and overarching statement, that it can't be increased. I thought the language of the letter would have been a clear message to our colleagues."

"It caught me by surprise," Wahl said of the council's amusement tax amendment. It also caught the three bingo machine operators by surprise, whom Wahl said he spoke with about the council's decision and two of them stated they will continue to pay the .5 percent tax rate based on what the state has said.

"No litigation will come from this government," Wahl said, answering that the town will not pursue the extra .25 percent tax.

"I assume nobody is going to sue anybody."

Wahl, flanked by council members Stewart Cumbo and Bob Carpenter, the two who did not vote for the amendment, said he spoke with Mahoney about the press conference and left messages with the other council members.

"I'm disappointed. As the town council saw this as a way to raise additional revenue … But if the mayor chooses not to pursue this, then let's call the vote symbolic," Mahoney said Monday.

In Wahl's letter to State Comptroller Peter Franchot, he said that he, along with several council members, was opposed to the amendment that increased the amusement tax to .75 percent upon the grounds that the terms apply to taxes "applicable to net proceeds" while the town's tax is imposed upon gross receipts.

charvat@somdnews.com