OCEAN CITY – City Manager David Recor presented a balanced budget plan with a slight tax increase this week as the Mayor and City Council head into budget meetings for the next week with staff.
On Tuesday afternoon, a special meeting was held for Recor to formally introduce the Fiscal Year 2016 (FY16) Proposed Operating Budget.
“I am pleased to present the City Manager’s FY16 Proposed Operating Budget for the Town of Ocean City, beginning July 1, 2015, which totals $145,141,358, for the Mayor and Council’s review and consideration. The Proposed Operating Budget includes the Town’s General Fund, all of the Town’s Enterprise Funds and Internal Service Funds in addition to the Pension & OPEB Trust. The Proposed Operating Budget represents a complete financial plan for the coming fiscal year as required by the Charter,” Recor’s budget message states. “These spending plans reflect many of the priorities identified by the Mayor and Council’s updated Strategic Planning Action Items as well as a continued commitment to provide a high level of service to our residents and keeps our visitor’s experience fresh and exciting all the while preserving our organization’s long-term financial viability. The FY16 Proposed Operating Budget is balanced and confirms that our distinguished resort community will remain clean, safe, healthy and strong – a place where the quality of life is unsurpassed.”
Recor’s proposed budget highlights many key components starting with expenditures for all funds total $145,141,358, which is a 2.3-percent decrease of $3,484,271 from FY15. General Fund revenues and expenditures equal $78,277,984, a 1.2-percent reduction for a decrease of $957,349 from FY15.
Jan. 1 marked the first year of a new Three-Year Assessment Cycle in Worcester County and all Ocean City residential and commercial property, with the exception of one section of commercial property from 25th Street south to the Inlet, was reassessed.
State of Maryland Department of Assessments and Taxation (SDAT) calculations indicate that Ocean City’s Net Assessable Real Property Base, as of July 1, declined 1.6 percent to $8,390,862,470, including a $26,836,505 increase in Estimated Abatements and Deletions.
The General Fund Property Tax Revenue Projection is based on the constant yield ad valorem tax rate of 47.8 cents for $100 of assessed property value. The town’s current property tax rate is set at 47.04 cents per $100 of assessed value. The property tax rate proposed by the city manager represents an increase of .76 cents and will generate $40,239,417, not including Corporate or Personal Property taxes. One cent on the Real Property Tax Rate is equivalent to $841,164.
The General Fund Budget is funded 53.96 percent by Real Property Tax Revenue continuing the downward trend since FY09. By comparison, seven years ago, the FY09 General Fund Budget totaled $80,470,291; Real Property Tax Revenue equaled $47,146,932 comprising 58.59 percent of the General Fund Budget.
The proposed budget includes $1,026,426 in “pay-go” Capital Improvement Project expenditures for Street Paving projects in FY16, a 2 percent Cost of Living (COLA) adjustment for all Fraternal Order of Police (FOP) bargaining unit members on Jan. 1, 2016, as provided for in first year of a new Three-Year Collective Bargaining Agreement that was ratified this week.
Also, a step increase on July 1 for eligible International Association of Fire Fighters (IAFF) bargaining unit members as provided for in third year of Three-Year Collective Bargaining Agreement, which expires June 30, 2016, in addition to a 2-percent COLA adjustment on Jan. 1, 2016. A 2-percent COLA adjustment for all General Employees on Jan. 1, 2016, and a 2 percent COLA adjustment for Step 1 Part-time Employees on Jan. 1, 2016.
The proposed budget does maintain the General Fund Balance consistent with Mayor and City Council’s fiscal policy of 15 percent of previous year General Fund expenditures equivalent to $12.1 million as of June 30, 2014.
As far as the Town of Ocean City’s financial position, Recor referred to the Comprehensive Annual Financial Report (CAFR) prepared by the Finance Department. As of June 30, 2014, the city’s total net position exceeded total liabilities by $161,468,387, which is a 5.5-percent improvement from FY15. Of this amount, approximately $27.3 million is unrestricted and may be used to meet the town’s ongoing obligations to citizens and creditors.
Recor summarized while Ocean City’s tax base appears to have stabilized, given the latest SDAT assessment, and specific economic indicators and the season outlook are favorable, there continue to be many demands for Ocean City’s limited financial resources. The FY16 Proposed Operating Budget reflects a collective effort to address the Mayor and Council’s Strategic Planning priorities and support our distinguished community’s needs.
“I am confident that our prudent fiscal practices and strategic budgeting approach positions us well for the new fiscal year,” Recor stated. “However, continuation of ‘status quo’ beyond FY16 will be a challenge. The issues facing the Town are numerous. Staff is also confident by working together, making difficult choices and decisions, establishing priorities, and developing predictable funding strategies, we can deliver results. We can continue to meet the Mayor and Council’s goals and objectives and exceed expectations.”
Recor furthered Ocean City’s residents and visitors expect quality services and programs, and the proposed budget avoids service level reductions, includes new programs and activities.
“With so many choices and competition for the tourist dollar, we recognize the importance of keeping our resort community fresh and exciting, a vacation destination and more livable community for residents alike,” Recor said. “Moving forward we will continue to perform more organizational fine-tuning looking for creative alternatives to optimize our existing workforce and better organize and deploy our employees to meet the needs of our dynamic Town. We will continue to improve efficiencies and focus resources toward achieving the Mayor and City Council’s Five-Year Strategic Planning Goals and continue to work closely with Ocean City residents, business leaders and our community partners to strategically invest in efforts to strengthen our community.”
The council started reviewing the budget by department on Wednesday, which will continue through April 17 when the budget wrap-up will be held.