OCEAN CITY — Resort officials this week approved on second reading the proposed $124 million fiscal year budget including a modest reduction in the tax rate, but not before defending a fund balance over and above their stated policy of 15 percent.
The Mayor and Council on Monday unanimously approved the fiscal year 2017 spending plan on second reading. The total spending for the next fiscal year is tabulated at just over $124 million, with the general fund making up around $81 million. The difference is made up by the enterprise funds such as water and wastewater, for example, which are largely self-sufficient and supported through fees and other payments for services.
The $81 million general fund budget represents an increase of around $1.1 million over fiscal year 2016, or about 1.5 percent. The good news for property owners is the tax rate will decrease slightly. Based on the constant yield, the tax rate for fiscal year 2017 is set at .4727, representing a modest reduction from the fiscal year 2016 rate of .478.
Property tax assessments increased about 1.1 percent for fiscal year 2017. The revenue from real property taxes in fiscal year 2016 was $40,239,417 based on the .478 tax rate. Even with the slightly lower tax rate of .4727, the estimated revenue from real property taxes in fiscal year 2017 is $40,438,210.
In recent years, the Mayor and Council have had a stated policy of maintaining a fund balance at 15 percent above the general fund budget, or a rainy day fund of sorts. This year, after all of the figures were tabulated, the amount over the stated 15 percent came in at around $1.9 million, of which $1.2 million was reinvested in capital projects and infrastructure improvements.
That left around $700,000 in undesignated funds above the 15 percent even after the capital projects were paid for. Local resident and former Councilman Vince Gisriel questioned moving target figures and, while grateful for the modest property tax cut, asked why it could not be reduced even further with the $700,000 in excess above the 15 percent even after the reinvestments in infrastructure.
“With that kind of excess in reserves, it should be given back to the people,” he said.
Local resident Ellie Diegelmann agreed and urged the council to go through the numbers one more time before approving the budget.
“There could be another half a cent reduction,” she said. “It could have been reduced further and we can do better than that.”
Resident John Adkins said the cost of living continues to go up while many in the community, including the elderly, are on fixed incomes.
“I don’t get a raise on my retirement,” he said. “People over 70 should be given discounts. If you want people to stay here, you have to make it affordable.”
Adkins also pushed for a further reduction in the property tax rate and used the example of his own rising property taxes in the years since he first built his house to illustrate the point. Adkins said when he first built his house his property tax was $792.
Last year, he paid over $5,000 in city and county taxes combined. Of course, a large percentage of that latter figure is county taxes, a point not lost on Adkins, who urged the town to consider pushing for tax set-offs for resort residents from Worcester.
“The county is getting about 60 percent of its revenue from Ocean City,” he said. “Hopefully, it will become an election issue someday, but we only get one vote [on the County Commission].”
Mayor Rick Meehan said the fiscal year budget on the table reinvests $511,000 in the street paving program, bringing that total to $2 million. The budget also includes $300,000 for the ongoing canal dredging program, $185,500 for improvements at Northside Park, $103,750 for the continuation of a surveillance camera project and another $103,750 for a fiber connectivity project.
“There was a modest decrease in the tax rate and our costs go up as well,” he said. “The fund balance is not set by law, it’s set by policy, and we think it’s a very conservative policy.”
Meehan said even after the property tax rate reduction, the budget allowed for reinvestment in the community which could be considered a reinvestment in the taxpayers.
“We do give money back to the residents, but it’s not always in the form of cash,” he said. “We’ve made significant infrastructure improvements and how our community is maintained is much better than many other communities and the residents appreciate that.”
In terms of tax differential, or tax set-offs, from the county, Meehan said a recent comment at a County Commissioners meeting illustrated the divide.
“I didn’t hear this first-hand because they don’t televise their meetings, but apparently when they saw we lowered our tax rate, they asked why we were asking for more money when we don’t need it,” he said. “Comments like that keep us continuing the battle.”
