OCEAN CITY – After what officials called a successful tourism season, new fiscal reports for 2016 show an improvement in the Town of Ocean City’s financial position.
Financial Administrator Martha Bennett shared highlights from the Comprehensive Annual Fiscal Report at Monday night’s Mayor and Council meeting.
“We had a good year,” she said. “We ended the year in a stronger position than we began it.”
In fiscal year 2016, which ended June 30, the town increased its assets 1.4 percent from the year prior, according to Bennett. Its holdings increased from $154 million to more than $156 million.
These funds, divided into multiple sections, reflect the financial operations of government, business-type and other related activities.
The town improved their financial standing in most areas. However, the city’s expenditures on the airport, Ocean City Convention Center, public safety and transportation exceeded its revenue. Additionally, the city’s pension funds experienced a 3.7-percent loss from investment returns, something Bennett said was comparable to others across the nation.
Yet, the town’s governmental funds increased more than $1 million from the year prior. Of the $22 million, more than 23 percent of the money is left unassigned, exceeding the town’s reserve policy of 15 percent.
Because of the town’s financial flexibility and spending control, Bennett said Fitch Ratings improved Ocean City’s rating last week from AA-minus to AA. Its ratings from Moody’s and Standard and Poor remained the same.
“We are really pleased we got upgraded,” she said. “It is significant for the town, and it does show how our position has improved since the recession in 2008 and 2009.”
Tourism was a significant factor in many governmental activities. In fiscal year 2016, the town increased advertising and tourism promotion, an investment that played a part in boosting sales tax revenues.
However, revenue from property taxes increased slightly as a result of tax increases and assessment decreases.
Councilman Wayne Hartman expressed his desires for the future budget to maintain a constant yield tax rate, which is the rate that would bring in the same amount of tax revenue as the year prior, but City Manager Doug Miller said it was too early to tell.
“It seems like ‘budget’ is our big word tonight,” Hartman said. “It’s going to be a tough year as far as budget time.”
“Every year is a tough budget year,” Mayor Rick Meehan replied. “Nothing is going to change that, but we are certainly up for the task.”
In additional comments, Councilwoman Mary Knight expressed interest in creating an informational video on the town’s tax usage.
“The city does an excellent job of convincing tourists to come visit,” Knight said. “We spend lots of money doing that. We don’t do such a good job of convincing people why they should live here.”
The initiative, proposed to the city council and Miller, would show the projects and services tax money is supporting.
Bennett agreed the video would be useful for explaining the city’s maintenance.
“I think it’s difficult for some people to understand what it means to operate a community on an island,” she said.
The suggestion was left for future discussion, but Knight added the financial reports could be confusing to current and future residents.
Also in the meeting, Chris Lehman of SB and Company presented the mayor and city council with the accounting firm’s audit opinion. The opinion gave the town a clean report on its finances and key processes.
