OCEAN CITY – When it came to lowering the tax rate, the City Council couldn’t have been more unified.
Whether you agree with the voting seven or not on many issues, or even if they agree with each other on other issues, taxpayers got some good news from City Hall this week as the council found a way to lower the tax rate from City Manager Dennis Dare’s recommended 41 cents per $100 of assessed valuation to 39.5 cents.
“The city manager (Dennis Dare) and the department heads, along with the Mayor and City Council set the tone very early in this process, and we said that if it wasn’t a necessity, it needed to be cut from the budget,” said Councilman Doug Cymek. “So, in the end, I feel very good about where we came in.”
During Tuesday’s budget wrap-up, the council voted unanimously to essentially pull almost $500,000 from the money allotted to pay the retired employee health benefits package, which totaled almost $2.7 million this year. That move would lower the tax rate from the 41 cents supported by Dare to 39.5 cents, up from the current 38-cent level. The council saw it as much more than a minor victory.
“I am very pleased for the taxpayers that we found a way to get this done,” said Councilwoman Margaret Pillas, “and I am one of those taxpayers, too.”
The money pulled from the retired employee health benefits package is a pay-in trust fund of sorts that the town contributes to on an annual basis to fund the benefits package for retired employees.
Council members thought that the $500,000 removed from the fund to provide an easement for taxpayers would be easily reimbursed by June 30, 2010, which is the date it must be paid back by without affecting the town’s borrowing power in the bond market.
“Some people thought this was a case of robbing Peter to pay Paul,” said Cymek, “so I reluctantly voted for it, but I think that we can easily make that money back by next June.”
A few of the cost-saving measures that will provide this payback, according to Council President Joe Mitrecic, include the current Request For Proposal (RFP) on the market for a outside entity to take over the removal of the town’s solid waste, which even the most conservative estimates of the savings report totals almost $250,000.
“If it would have been a million dollars, I wouldn’t have voted for it,” said Mitrecic, “but with a budget of our size, coupled with this savings we will see by outsourcing our solid waste and several other things, two or three hundred thousand isn’t a whole lot to make up.”
Mitrecic said he was pleasantly surprised with getting the proposed tax rate down to 39.5 cents, citing that he thought Councilman Joe Hall’s initial request several months ago to lower the tax rate beyond Dare’s recommendation seemed far-fetched.
“Personally, I didn’t think we could get it anywhere below 40 cents,” said Mitrecic, “but the budget is a living, breathing thing, so I think that it will pass unanimously at 39.5 cents on first reading Monday night.”
City Manager Dennis Dare, however, had some reservations about taking the $500,000 from the trust fund for the retired employees.
“That’s one of the things that concerns me about this decision”, said Dare, “but if all goes as it’s supposed to go, we should be able to make back that money.”
Dare said that all the cuts that could be made on his end are already in place, so if the council finds itself in a position next year to come up with any portion of the $500,000, they are going to have to cut services provided to residents.
“The tax rate at 39.5 cents and the cuts the council has made do work now, but I’m concerned about next year,” said Dare. “Part of my job is to look and prepare for problems, and there just isn’t anything else to cut. If we need to find money, we are going to have to look at the services we provide with a very critical eye.”
The town faces commercial assessments next year, which are expected to take a significant dip, as well as a $500,000 beach replenishment project that will essentially raise next year’s tax rate by about a half a cent. Dare also noted that the town’s decision to put a stop on infrastructure projects indefinitely might prove costly in the long run.
“There’s just certain things that you just can’t ignore for too long, and infrastructure is one of them”, said Dare, “but it’s the council’s decision, and with as conservative as I am or try to be, I think this was a less-than conservative move.”
Councilman Joe Hall commended his colleagues for working together in an unusual fashion to get the tax rate lowered, alluding to his vocal outcries to the public before and after last year’s election for a more responsible approach to spending.
“I wanted to be vocal and aggressive to express a need to provide relief to the property owners, and I’m glad that Dennis and the council got behind me and took it to heart,” said Hall. “I think when everyone looked at the gravity of the situation, we right-sized our government by cutting out things that were wasteful and we shouldn’t have been doing anyway.”
Mitrecic noted that the sacrifices made by the Fraternal Order of Police and the Firefighters unions, who chose to forgo their step raises in their collective bargaining agreements, played a huge role in lowering the tax rate to 39.5 cents.
Hall, who said it took a “financial crisis to finally right-size our government”, added that the cuts brought forward by the town’s staff and department heads made Dare’s job to find cuts in the budget “much easier” and Dare was equally as helpful to the council.
“This was a concerted effort by everyone”, said Hall. “I was elected to be part of a team, and this is the clearest instance that we all made a big decision in a unified way.”