OCEAN CITY – The budget for the upcoming fiscal year cleared opposition in first reading this week as the Mayor and City Council directed antagonists to the county if they are looking for a tax break.
On Monday evening, the Fiscal Year 2016 Operating Budget came before the Mayor and Council for approval in first reading. The budget is based on a tax rate set at constant yield of 47.8 cents for $100 of assessed property value. The town’s current property tax rate is set at 47.04 cents. The property tax rate proposed by the city manager will generate $40,239,417.
As of the end of FY15, which is June 30, approximately $2 million will be available for appropriation, which leaves over $11 million in reserve, meeting the town’s fiscal policy of 15 percent of previous year General Fund expenditures.
Out of that $2 million, the Mayor and City Council has been in consensus to appropriate $1.6 million to fund additional capital improvement projects, including canal dredging, street paving, exterior repairs to the Public Safety Building, the town’s local match for the Public Works facility campus plan, a feasibility study for another Roland E. Powell Convention Center expansion project, city security upgrades, the painting of two Solid Waste vehicles, the first phase of Winterfest structure replacements and a social media recruitment campaign for the police department.
Former Councilman Vince Gisriel, along with a couple others who echoed the same remarks, came before the Mayor and Council to voice opposition to the slight increase in the proposed tax rate.
Gisriel stated $35,000 for a feasibility study of a convention center expansion is “ill conceived.” He said $40,000 to repaint two trash trucks is high when a group of volunteers could do the job at a much lower cost.
“The convention center is expanded large enough, and I don’t see the need to expand it to accommodate a handful of events that may need more space, particularly since you opted to move ahead with the Performing Arts Center, and now you want the citizens to support an expansion,” he said.
Gisriel furthered the town should investigate privatizing and/or selling the Ocean City Municipal Airport and Eagle’s Landing Golf Course.
“The point I have been trying to make along with others over the years is we need to be frugal,” he said. “These things are going to continue to be a drain on the taxpayers of Ocean City, and I think now is the time to start to look at that into the future to save down the road.”
Gisriel pointed out Worcester County is facing a $189 million budget with a proposed 16.25 cent increase in the county tax rate, which includes Ocean City taxpayers.
“The responsible thing to do knowing that the county is going to raise the rate at some amount, I predict somewhere in the range of 7.10 [cents], which is bad enough but given that factor the local government should hold the line,” Gisriel said. “All I am asking you to do between now and second reading is to scrutinize it. Any way you can get it down to at least the level of last year or below because I think we are going to have a significant increase in the county.”
At this point, Ocean City Budget Manager Jennie Knapp asserted since 2009 Ocean City’s General Fund has stayed below $80 million and the percentage of tax revenue that funds that budget has dropped from 58 percent to 54 percent.
“The council has held the line. You use the word ‘scrutinize’. Well I know how many meetings the city manager and budget manager had with the department heads scrutinizing budget requests before it was even brought to the Mayor and City Council,” said Mayor Rick Meehan. “Then the Mayor and City Council sat with the department heads and scrutinized the budget again. There was a lot of time and commitment that went into this. It was not just a decision over night. It is difficult for those in opposition to the budget to find things wrong with it.”
The mayor added the county is in a difficult situation because the commissioners put themselves in that position.
“If you work for 12 years in Worcester County and retire you get health benefits for life, for you and your spouse. Tell me another state, city or municipality that does that, and that has been funded by Ocean City. They have had very few reductions in work force unlike the Town of Ocean City did, and it is catching up with them. It is unfortunate that we should pay for that mistake,” he said. “We will always do what we can to bring the budget in at an as low as possible rate and still provide the same level of service that everybody expects. If we cut it to a lower level that is being suggested, then it is the level of service that we will be cutting, and then we will have a lot more people in this room talking about the budget.”
Councilman Wayne Hartman added $40,000 to repaint two trash trucks over buying two new trucks is not something that should be criticized as well as moving forward with the convention center expansion feasibility study.
“This is just a small expense for us to look at the idea of expanding the convention center that would put us in a different league and attract more visitors. Part of the funding of the study comes from the Maryland Stadium Authority and our food and beverage tax. It doesn’t come from a penny of your tax dollars,” Hartman said. “It has the potential of driving business in town to the hotels and different restaurants that will generate additional room tax which will in turn result in a cost saving, so that is a new business opportunity that we are exploring and should be complimented for doing that.”
Hartman also pointed out the proposed budget is not only based on constant yield but includes unspent money.
“Those things are to be commended. I think it is an awesome budget,” he said.
Unlike his colleagues, Councilman Matthew James was not in favor or raising the tax rate to constant yield.
“I have received many phone calls over the past couple weeks, and I agree with most of what people are saying, and it all has been along the lines of what Mr. Gisriel is saying,” James said. “We have a great town, and we have great staff, but when I was campaigning and walking through neighborhoods talking to taxpayers and residents they were all concerned with the tax rate and the budget. We were elected to look out for them, and I did not talk to anybody who wanted to see an increase.”
Councilman Dennis Dare does not understand why it is the opinion that setting the tax rate at constant yield is considered a tax increase.
“Nobody makes a check out for 47.8 cents for their taxes. They make a check out that multiplies the tax rate times their assessed value. Sometimes when a property is reassessed our values go down and sometimes they go up. This last reassessment all of Ocean City’s went down slightly, although some properties had an increase. Your taxes are going to go up whether it is 47.04 cents or 47.8 cents because your value of property went up, and that is a good thing,” Dare said. “We held the tax bill. The rate has to fluctuate, and we are still collecting as much money as we did last year overall, so if you really want a tax break then go to Snow Hill [Worcester County] and talk to them about a tax differential instead of knit picking the little stuff that we are talking about here.”
The council voted 6-1 to approve the FY16 Budget on first reading with James in opposition. The budget is scheduled to receive its final approval on Monday evening of May 18.