OCEAN CITY — Quietly amid the uncertainties surrounding the ongoing pandemic and the impact on the summer season, resort officials this week approved a fiscal year 2021 “Plan B” budget amounting to a property tax reduction for most.
When first presented in March, the proposed fiscal year 2021 budget for all funds came in around $156 million including enterprise funds. The all-important general fund budget in the original Plan A, or pre-COVID-19 budget, came in around $97 million and was based on anticipated revenues and expenditures in the coming year.
At the same time, City Manager Doug Miller and Budget Manager Jennie Knapp presented a Plan B budget that attempted to account for the potential and realized ramifications of COVID-19 with adjusted estimates on certain revenue sources including room tax, for example.
For second reading on Monday, the Mayor and Council had before them proposed Plan B budget, which had been pared down from the original spending plan. The Plan B budget approved unanimously by the council on Monday comes in at roughly $136 million, or about $20 million less than what was first proposed. The general fund under Plan B is around $89 million, also significantly less than what was originally proposed.
The Plan B budget includes a constant yield tax rate of .4559, which is a reduction of the .4656 property tax rate in the current fiscal year 2020. As a result, the personal property and corporate tax rates have been reduced from $1.29 per $100 of assessed value to $1.14 per $100 of assessed value. There was at one point a Plan C budget on the table that would have retained the same tax rate as the current fiscal year, but that plan got little traction among the council and was taken off the table early.
The approved budget includes property tax revenue estimates at around $42 million, which funds about 47% of the general fund budget. Capital projects in the fiscal year 2021 budget have been funded at about $2.8 million, which includes $2.1 million for street paving, $400,000 for canal dredging, $100,000 for storm drain cleaning, $100,000 for Boardwalk maintenance and $60,000 for phase two of the City Watch video surveillance system.
Other capital projects in the original Pre-COVID-19 Plan A budget were eliminated or deferred to the out years. Surviving the cuts, however, were repairs to the transfer station tipping room at $352,000 and $100,000 for year four of five for the town’s commitment to the Atlantic General Hospital capital fund. Fund balance of $1.7 million has been appropriated to fund the capital projects that made it through in the Plan B budget approved on Monday.
The Mayor and Council acknowledged many unknowns on the revenue side as the town moves toward some semblance of a summer season and the budget would have to be adjusted accordingly in the coming months. For example, Councilman Tony DeLuca during earlier budget deliberations had asked for a hiring freeze including three proposed full-time positions. Those three positions were included in the fiscal year 2021 budget approved on Monday as essentially place-holders in the spending plan with the caveat filling them could be revisited and ultimately approved by the council later in the year.
Every year, there are budget amendments during which funds are moved one way or the other based on estimated versus real revenue and expenditures. With all the uncertainty surrounding this year, the budget approved on Monday can and likely will be amended often.