OCEAN CITY – It is that time of year for the current fiscal year to receive its first update, as the council weighs its options in how to spend pension contribution savings.
The first amendment to the current fiscal year budget (FY15) came before the Mayor and City Council during Tuesday’s work session.
According to Budget Manager Jennie Knapp, the budget amendment appropriates an additional $855,680 from fund balance to cover council approved expenditures for street paving, Beach Patrol headquarters, the town’s local match for repaving of a runway at the municipal airport and the transfer of Beautification Committee donations to fund a water feature at the Roland E. Powell Convention Center.
Knapp furthered, an additional $682,076 of appropriated fund balance is included to cover prior year purchase orders and items approved in the FY14 budget but not purchased, such as advertising and Tourism Advisory Board funds, painting and carpet at City Hall and Northside Park patio resurfacing as well as $350,000 of the savings in retiree health insurance has been used to reduce revenue estimates for Emergency Medical Service billing, parking revenue and parking fines.
The amount taken from fund balance increases $1,537,756 from $931,828 in the FY15 Adopted Budget to $2,469,584. However, the fund balance remains at or above the 15 percent of annual expenditures policy target.
“This budget amendment does not change the tax rate in any way therefore does not affect the taxpayers,” Knapp said. “It includes all changes since the budget was passed, including grants the town has received and any motions the council has made to fund additional projects. It is necessary at the end of each fiscal year to close out capital project balances and bring them forward, close out purchase orders and bring forward the amounts that are open from one year to the next, any grant balances also have to be closed at the end of the fiscal year and be brought forward the next fiscal year. That is all we are doing in this budget amendment.”
The council voted unanimously to forward the budget amendment to the next legislative session to be passed in first reading.
City Manager David Recor added the town has saved in pension contributions.
“Initially that was a $1.8 million savings, and as a result of the adjustments to revenues here [budget amendment] that figure stands at roughly $1.5 million,” he said. “The council has asked we return with recommendations, and we do have some thoughts as to how those monies can be allocated, and are prepared to proceed as you wish.”
Recor acknowledged street paving has continued to be a high priority item, as well as the town began to fund canal dredging last year but other cost worthy items are approaching such as union negotiations.
“All of these things are at the forefront of our recommendation to the Mayor and City Council but we think it boils down to three areas,” he said.
Knapp broke it down starting with a potential $90,415 transfer to the Vehicle Trust Fund to complete vehicle purchases for this fiscal year. The Vehicle Trust Fund was underfunded when the original FY 15 Budget was passed.
Next Knapp asked for $650,000 to be reserved for next fiscal year’s budget for street paving due to the uncertainty if the town will receive additional Highway User Grants. Typically street paving is funded by highway user funds and grants, parking revenue and casino revenue.
The final request was to reserve $500,000 to continue canal dredging in the next fiscal year.
Council Secretary Mary Knight made a motion to transfer $90,415 to the Vehicle Trust Fund for this fiscal year and to reserve $650,000 for street paving and $500,000 for canal dredging for next fiscal year.
“We waited to see what the balance was in FY14 budget to allocate and I am wondering if that would be a wise move this year with different issues in front of us, such as contract negotiations,” Councilman Wayne Hartman said.
Knapp explained contract negotiations will not affect the current year budget.
“We do have savings in retiree health and pension that partially offset that in next year’s budget. Typically, we use any savings that we have for capital items rather than operating costs. We do know that we have this $1.5 million, and we do know that we want to continue to fund street paving and the canal dredging project,” she said.
Hartman asked what if there was a catastrophic event and the savings was already reserved for capital improvements.
“I don’t see anything in the budget that alarms me,” Knapp said. “If something were to happen in the next six months, the money will still be there and we can always reverse it into the general fund if we needed to.”
Councilman Dennis Dare is not opposed to the requests but is opposed to the items not being scheduled on the agenda and not being able to look at the request comprehensively.
In agreement, as Knight was about to withdraw her motion Knapp asked the council to consider to at least consider the transfer to the Vehicle Trust Fund because it was underfunded in the current fiscal year.
Knight amended her motion to only transfer $90,415 to the Vehicle Trust Fund, and for the street paving and canal dredging allocations be put on the next Mayor and City Council agenda to provide study time and public comment.
At the conclusion of the work session, Mayor Rick Meehan announced he had just received a report on November’s room and food tax. In November, room tax was up 9.78 percent and food tax was up 20.69 percent. Year-to-date room tax is up 3.25 percent and food tax is up 3 percent, which is good news for the budget in the long run.