OCEAN CITY — As the annual budget process begins at City Hall, the good news is that Ocean City can operate at the constant yield rate in the year to come. The bad news, however, is the town will have to do it with $3.5 million less in revenue.
The City Council, on the other hand, is hopeful that the end result or bottom line will be the same tax bill for Ocean City residents and property owners as last year.
City Manager Dennis Dare did his annual presentation of the resort’s proposed budget on Monday night, outlining what everyone already knew – times are tough, costs are up and revenue is down. Yet, despite the staggering numbers of increased costs for this upcoming year, including a 30-percent increase in health insurance premiums for town employees and fuel costs up about $340,000, coupled with projected revenue declines of $268 million in assessable tax base and state aid cuts for police protection and highway user taxes totaling $870,000, Dare stated that he was confident the town could operate under the new constant yield rate of 40.5 cents per $100 of assessed valuation.
“40.5 cents is the new 39.5 cents based on what the constant yield rate is, so if we want to bring in the same amount of revenue as we did last year, 40.5 cents will do that without any change for the residents and property owners,” said Dare.
For the second straight year, Dare pointed to the sacrifices made by town employees and massive internal restructuring of local government as reasons why the town will even come close to holding the proverbial line. Mayor Rick Meehan called the proposed budget “responsible”, noting starting budget talks early has proved to be wise the last two years.
“I think what Dennis presented on Monday puts us at a great starting point going into the budget process,” said Meehan. “We have changed the way we approach the budget process, and we have started earlier the last two years and made cuts and added revenue where we could. I’m very confident about where we will end up based on where we are starting.”
There’s a lot of numbers that are sure to be thrown out over the next several weeks as the council goes essentially line by line through Dare’s proposed budget, but Budget Manager Jennie Knapp said this was the “tightest” budget she’s ever seen in Ocean City, and others in the town hierarchy have hinted that further cuts may be very hard to come by.
The town’s recent decision to outsource the recycling tasks resulted in $1 million in savings, while the increased Inlet parking lot fees and the new taxi medallion changes allot for an additional $550,000 in new revenue for the town.
In addition, Dare pointed to savings due to the kibosh of citywide capital improvement projects and the town’s hiring freeze in which 59 positions sit vacant, while an additional 30 employees opted for the recent retirement incentive plan.
“We saved an additional $1 million with departmental restructuring and consolidation, and our workforce is scaled back to 536, which is 86 less than last year,” Dare said. “If you compare Ocean City to 1997, we have only increased by 43 employees, but public safety has increased by 50 in those 13 years, while general governmental positions are actually down seven positions.”
Still, some council members are looking to further trim from the constant yield rate of 40.5 cents.
“I want that penny back and I’m planning on fighting for it,” said Councilwoman Margaret Pillas. “It’s going to be tough to find a million bucks to bring it back to 39.5 cents, but I’ve got some ideas going into the process.”
Pillas says that she feels the taxpayers want the council to look to reduce salaries of town employees, specifically in the top third of the pay-scale, which ironically would start with City Manager Dare and Public Works Director Hal Adkins, whose efforts to “right-size” local government have been highly praised.
“The taxpayers are my boss, and they are looking at some of these salaries and they think they are too high, so I think that it’s time to consider a sliding scale from the very top of the list in salary decreases and in doing so, service the taxpayers by bringing down the salaries in a conservative manner,” Pillas said.
Additionally, other cuts the council might consider would be on services, such as the Boardwalk Tram or winter bus schedules, according to Dare’s presentation.
Up until this point, the council has been hesitant to cut any services.
“When things are as tough as they are, sometimes we have to make cuts that are painful for the taxpayers,” said Councilman Doug Cymek. “It hurts me to have to do it, but we are going to have to face some of those if we want to lower that tax rate.”
Dare said that the “heavy lifting” has essentially been done already, but he noted in response to Pillas’ idea of cutting salaries that he didn’t think it was prudent.
“If I would have thought it was prudent or necessary to do, I would have included it in the budget I proposed,” said Dare. “We are already asking our employees to do a whole lot more work for the same or less money, and to be honest, I think that furloughs and reducing salaries suggests desperation and the inability to reduce the size of the government to meet what the public is willing to pay for.”