City Council Approves Budget At Constant Yield Rate

OCEAN CITY – Despite final pleas from some, the Mayor and City Council passed the upcoming fiscal year budget based on a tax rate of 47.8 cents per $100 of assessed property value.

On Monday evening, the council was presented the Fiscal Year 2016 Operating Budget for approval in its second and final 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 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 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.

The budget was passed on first reading with Councilman Matthew James being the only voice of opposition.

“I didn’t vote for the budget in first reading and I am sticking with my vote,” James said this week. “I understand that my concerns should have been addressed during the budget meetings and the hearing. I really thought we did a good job during the budget meetings, and I learned a lot but it wasn’t until afterwards that I felt we could have cut some spending, and it would have showed the voters that we are listening.”

Councilman Tony DeLuca recognized many Ocean City taxpayers question constant yield in how the tax rate may slightly be raised but only to bring in the same revenue as last year due to a decrease in assessments.

“We know that when assessments go down, the rate goes up and the dollars remain the same. This year our assessments in Ocean City overall went down 1.6 percent and if you look at our .478 versus .4704 that tends to be a 1.6-percent increase,” DeLuca said. “The process went very well. We had 28 departments present, and during those presentations the Mayor and City Council had the opportunity to ask anything. We could have cut, increased and questioned for two weeks … we didn’t increase dollars at all. When you look at total tax dollars, there is no increase at all.”

Budget Manager Jennie Knapp explained the difference in the FY15 and FY16 property tax line item is an increase of $151,000 due to estimated increases in certain line items, not from the tax rate.

“That difference is because in FY16 the State’s Assessment Office is estimating that there will be new construction that is going to give us an additional $96,000 in revenue. Part of that estimate is not just property tax on home owners. There is personal property tax. I increased the estimate of what we will receive from personal property tax by $4,000. The estimation for corporation tax by $3,000 and there is also interest in penalties that I increased by $5,000,” Knapp said. “In FY15, there was also an estimate for new construction and we received $16,680 in revenue. The tax generated in FY16 on the new construction is approximately $26,600. So when you come right down to it the money that we are going to get from homeowners and taxpayers in the Town of Ocean City is the same as last year.”

Former Councilman Vince Gisriel came before the council again requesting the tax rate be held at last year’s rate.

“Councilman James, I want to applaud you for your vote two weeks ago and your indication tonight that you’re going to vote as you did the last time,” Gisriel said. “It is refreshing to have a politician that reflects what the people want. You are reflecting what the will of the people is, and you have a long, successful career ahead of you if you stick to your guns and listen to the people.”

Contrary to what some may think, the council studies expenditures closely during the budget process, according to Mayor Rick Meehan.

“To hold it to constant yield is a great accomplishment,” the mayor said. “Our goal is to come in with the best budget that we could and to provide the goods and services that we think the residents are looking for. When you start to take them away, they start to notice them. It is important that the public speaks and I know part of your goal is to make sure that we are cognizant of what the issues are and what the feelings of the public are. Trust me we are cognizant.”

The council voted 6-1 with James opposed to approve the FY16 Operating Budget and its final reading.