Minimum Wage Hike, Overtime Costs Strain OC Budget

OCEAN CITY — With the dust settling after a whirlwind two weeks of budget deliberations, the pending minimum wage increase and a “tremendous” amount of overtime continues to vex resort officials.

The Mayor and Council on Tuesday completed two weeks of budget work sessions with a budget wrap-up during which some last-minute items were added and others were cut. There is still the chore of officially approving the balanced fiscal year 2020 budget, which is often a formality, but based on how this current budget season has played out, that might not be the case.

Throughout the budget process, the pending minimum wage increase approved by state legislators during the recently-completed General Assembly session permeated nearly every individual department presentation and every discussion and it reared its potentially ugly head again during budget wrap-up on Tuesday.

Another issue that came up during budget wrap-up was the significant amount of overtime paid by the town to employees in various departments, which goes hand-in-hand with the minimum wage issue. As Ocean City’s largest employer, the town is perhaps most vulnerable to the graduated minimum wage hike, which will go up to $11 on July 1. The proposed fiscal year 2020 budget absorbs that increase, but meeting the growing minimum wage hike in out years will present challenges, according to Councilman Dennis Dare.

“I think we need to plan,” he said. “This solves this year, but we need a plan for the next five years. We need a study on how we’re going to protect our employees and our taxpayers as well.”

Budget Manager Jennie Knapp said the immediate concern has been addressed, but held out reservations for the future.

“This is a very serious issue for the town,” she said. “There is going to be an 8- to 9-percent increase over the next five years and we’re going to have to absorb that. We covered this year, but we’re not going to be able to do that in years two, three and four.”

Councilman Tony DeLuca said each department should scrutinize their numbers and perhaps find a way to do more with less.

“We know we need to plan,” he said. “I’d like to see our department heads come forward with a five-year plan for how we can cover this. Let’s do it by September so we can include it in our five-year strategic plan.”

Equally concerning is the amount of overtime paid to municipal employees, an issue that also came up during budget wrap-up on Tuesday. Knapp said the proposed budget included around $2.8 million in overtime. The majority of the overtime is concentrated in public safety at $2.2 million, with public works contributing another $400,000.

Much of those increases are caused by the ever-growing special events in the shoulder seasons. Nonetheless, DeLuca said the overtime policy need further scrutiny.

“We need to talk about maybe tweaking the policy,” he said. “That is a tremendous amount of overtime.”

Councilman Matt James suggested the overtime issue was less of a policy issue and more of simply having the right people in the right places, especially during the shoulder season events.

“I don’t think of it as an overtime policy issue,” he said. “I think it comes down to having enough people to fill the positions.”

Councilman Mark Paddack scoffed at a notion some of the special events hours that fall on experienced personnel and contribute to the overtime issue could be covered by less experienced part-timers.

“Those employees are highly trained,” he said. “To put part-timers out there would be ludicrous. The special events in the shoulder seasons put a tremendous strain on public safety and public works with the number of people needed to cover them.”

Mayor Rick Meehan pointed out the number of people and the number of shifts needed to cover the weekend special events was not going to change regardless of who was covering them.

“Those overtime hours have to be paid one way or the other, especially with public safety,” he said. “You want your best-trained people out there when you have these special events instead of part-time employees. It’s a delicate balance.”

While the significant amount of overtime is not directly impacting the proposed budget the Mayor and Council appears poised to adopt, DeLuca said the issue deserves a deeper discussion going forward.

“This discussion proves to me we need to look at this carefully during strategic planning,” he said. “We need to have this discussion because $2 million-plus is a lot of overtime.”

Paddack said the minimum wage increase coupled with soaring overtime costs was only going to get worse going forward and pointed to one unfunded request to illustrate his point.

“We’ve heard through this process they need 18 more paramedics,” he said. “That’s not going to happen. I hear from our constituents to start cutting the budget, but we’ve done that. Where else are we going to cut?”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.