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County counters Annapolis' bid for tobacco revenues on 2 fronts


County officials are hoping a two-pronged assault this week will thwart Annapolis' attempt to collect $9.2 million in tobacco tax revenues the city says it is owed.

Anne Arundel officials will argue tomorrow before a Circuit Court judge that the city's lawsuit to collect the money should be dismissed, principally on technical grounds that the suit is too general in naming Anne Arundel county as defendant.

But county officials, to cover themselves, are seeking a legislative remedy as well. The county's Senate delegation is expected to vote by tomorrow to determine whether it will support a bill proposed by Sen. John A. Cade that retroactively would repeal the county's obligation to pay the tobacco tax revenue to the city.

At issue is a law passed by the newly formed Anne Arundel County Council after charter government was adopted in 1965 to repeal a state law that forced the county to pass along to the city one-seventh of the revenue it received from the state's tobacco tax.

From 1961, when the tobacco tax was initiated, to 1992, when the state stopped sharing the tax with the counties, Anne Arundel received about $34 million.

In 1945, the General Assembly passed a law that required the county to give one-seventh of all new state revenue to the city. When the tobacco tax was instituted in 1961, the county passed a share to Annapolis. Although the County Council repealed the law in 1965, payments to Annapolis continued until 1969.

The claim for the back revenue withheld from 1970 to 1992 was first made by Sylvanus B. Jones, a retired U.S. State Department employee and Annapolis resident. Mr. Jones filed a lawsuit in November, but it was dropped a month later.

The city filed its suit in December after attempts to collect the money from the county proved fruitless. Annapolis officials took the action after receiving an opinion from the attorney general's office stating that the county did not have the authority to repeal the state law that required tax revenue sharing.

For the 22 years the county failed to make payments, city officials estimate they are owed $3.9 million in principal and $5.3 million in interest calculated at 6 percent, for a total of $9.2 million.

Annapolis officials, who are optimistic about their chances in court, want the retroactive repeal bill killed.

"I'm not sure the General Assembly should get in the business of taking sides in these disputes," Annapolis City Attorney Paul G. Goetzke told the Senate delegation at a hearing last week. "More importantly, this matter is still before the courts."

Diane Hutchins, the county's legislative liaison, said County Executive John G. Gary asked Mr. Cade, an Arundel Republican, to sponsor the bill because "we don't see the need for all this time, money and energy to be expended" fighting the lawsuit.

From the county's perspective, Mr. Cade's bill merely reiterates what that first County Council thought it had accomplished: "All you're doing is putting a period at the end of a sentence that we thought was long there," Ms. Hutchins said.

Most members of the Senate delegation would like the county and the city to resolve their differences, without resorting to legislation or the courts.

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