OCEAN CITY — All things considered, the town of Ocean City’s budget is still holding a reasonably strong line.
During the first of two annual budget amendments, which was presented by Budget Manager Jennie Knapp on Tuesday afternoon at City Hall, Knapp told the Mayor and City Council that she was able to move some things around with savings and revenue enhancements to compensate for the losses of revenue in other areas.
Knapp said that thanks largely to the massive cuts and sacrifices brought forward by the employees and department heads of Ocean City, the budget is holding a strong line despite the worst economic climate in decades.
“They have really made my job a lot easier with all the cuts and changes that were made,” said Knapp.
The first budget amendment of the year is historically important as it usually points to how the town’s busy season translated into dollars for the town itself, according to City Manager Dennis Dare.
“This most recent amendment does two things,” said Dare. “Most of our activity is in the summer so we can look to see how well or how poorly we did and make the necessary changes that we need to for the rest of the year. We essentially make an educated guess on what we think the revenue is going to be, and then we tweak that guess and move things around as needed.”
For instance, Knapp had been admittedly conservative with her projections, essentially not banking on an exorbitant amount of money to be rolling in due to the $1.1 billion decrease in property assessments last year. However, Knapp reported that a few of her projections were exceeded by what actually came in, most notably in the room tax revenue department, which despite the hotel industry having a rough season according to most standards, actually showed a 1.1-percent increase through the month of October, resulting in an extra $229,000 in room tax revenue for the town.
In addition, an extra $15,000 was collected in parking fines than was projected, as well as $639,000 more in grants brought in than had been allotted.
In all, there were a total of $3.1 million in revenue increases, according to Knapp’s report, which could give a bit of validity to town officials’ claims that the town fared well this summer, despite murmurs from some in the business community that thought it was a bit of a proverbial wash.
On the other side of the coin, however, Knapp said that the decline in property assessments last year resulted in $700,000 less than what they had planned for, as well as $687,000 less in Highway User Tax and $137,804 less in state money for police aid.
“The state took almost 90 percent of the money ($700,000 of $750,000) usually awarded to municipalities like ours,” said Knapp.
The other glaring fact in the first budget amendment is that the town’s spending cuts and revenue enhancements are working and enabling the town to pay back some of its more risky and rather sensible moves from last year.
For instance, the Mayor and City Council elected to lower the tax rate when they passed the budget last year to 39.5 cents per $100 of assessed value, from the proposed 41 cents. To pull that off, the Mayor and City Council essentially took $500,000 from the retirees’ health insurance plan to lower the tax rate, knowing that they would have to refund that money to the retirees’ health insurance plans by June 2010. Last week, the town decided to reduce pension plan funding for next year, by $437,000, which will allow for $400,000 to be moved back to the retiree health insurance plan, leaving only $100,000 left to recover by June.
Some of town’s other departments or entities that make up the budget (water, wastewater, convention center, airport, golf course, etc) appear to have posted good results fully based on the hiring freeze, which saw $47,000 cut from labor costs during Sunfest alone, and decreases in fuel costs, which ended up seeing a $290,000 saving in what the town had planned for last year.
“We had expected that the cost of fuel would go back up again, but it never really did, so we saved a lot of money that way,” said Dare. “Plus, we lessened the usage of our town vehicles and our payroll was smaller as a result of the hiring freeze.”
The aforementioned increase in room tax revenue figures would mean that the city’s advertising budget would be increased by $81,401, based on the formula set in place to fund the town’s advertising budget. However, tourism officials won’t be getting too excited as Knapp said during the last budget amendment, that she was planning for a decrease in the room tax revenue, which would result in a $78,000 trimming from the town’s advertising budget.
Dare said that the minimal net increase of $2,857 is essentially better than expected and concurrently better than nothing.
“We look backwards and then we look forwards and make our projections that way so we don’t have any major problems sneak up on us,” said Dare. “It’s nice when you see that you did better in some areas than you expected, but you sometimes do worse in other areas than what you planned for. I think we saw that, but I assure you that we are on the right course.”