OCEAN CITY — Ocean City ended fiscal year 2020 in a robust way, despite much of its fourth quarter being impacted by COVID, according to the Comprehensive Annual Financial Report (CAFR) released this week.
During Tuesday’s work session, Finance Director Chuck Bireley presented the CAFR to the Mayor and Council. The weighty tome is chock full of numbers and statistics, but the bottom line said it all for what was expected to be troublesome year because of the ongoing pandemic.
In simplest terms, the final projected budget number on the revenue side was around $86 million, while actual revenues for fiscal year 2020, which ended on June 30, came in at about $88.6 million, for a difference of $2.6 million. On the other side of the ledger, expenses for fiscal year 2020 were budgeted at $79.9 million, but the town’s actual expenses for the fiscal year came in at $77.7 million.
When a $72,000 variance in other financing uses was added to the mix, the town ended up with a $4.8 million variance in what was budgeted and what actually happened. Bireley said the bottom line was good news for the town.
“This presentation will be brief because you’ve recently seen some of these numbers,” he said. “It was a good year financially for the town of Ocean City. It was unexpected, but we ended the year in a very good place financially.”
Councilman Tony DeLuca said the final CAFR numbers were something to crow about, especially during a difficult pandemic.
“Any time revenue is up over $2 million and expenses are down $2 million, it was a very, very good year,” he said.
The successful conclusion to fiscal year 2020 allowed the town to continue to grow its unassigned general fund balance. For years, it was the town’s stated police to maintain a reserve fund balance, or a rainy-day fund of sorts, at 15% of the general fund balance. At recent strategic planning sessions, the state goal was unofficially back to 20%.
However, the CAFR presentation on Tuesday showed the unassigned fund balance has swollen to 29.6%. Even before the CAFR presentation, and the somewhat related presentation on the recently-completed audit of the town’s financial statements for fiscal year 2020, former Councilman Vince Gisriel questioned the growing fund balance, as he has been wont to do in the past.
“The unassigned fund balance is now at 29%,” he said. “That’s the equivalent of 12.6 cents on the tax rate. You continue to overtax the taxpayers.”
Gisriel also questioned sections of the CAFR that outlined the expenses related to the redevelopment and expansion of the town’s midtown Public Works campus. He pointed out the massive project’s budget has gone up and down with variance of sometimes $8 million on the road to completion. Gisriel said he has raised the questions before, but has yet to get all of the answers.
“Where will that extra $8 million come from?” he said. “I’ve been waiting 19 months-plus for answers. Frankly, I’m appalled by the lack of information that comes back to the public. I’d like to initiate an investigation into why it keeps increasing and where the money is going.”
In terms of Gisriel’s question about the growing fund balance, Mayor Rick Meehan said it is needed to ensure the town has a nest egg for emergencies, and also to secure the best scores from the various rating agencies.
“We need to ensure we have enough to cover potential shortfalls in fiscal year 2021 and fiscal year 2022,” he said. “That’s what the fund balance is for. It’s there to cover unforeseen expenses.”
Chris Lehman of SB and Company presented the report on the audit of the town’s financial statements for fiscal year 2020, which came back squeaky clean with no issues or concerns. Lehman agreed the town’s unassigned general fund balance was attractive from the outside looking in.
“It is a very healthy fund balance,” he said. “I think a lot of jurisdictions would be jealous of that favorable position.”
Lehman also attempted to address Gisriel’s question about the expected increases on the final cost of the Public Works Campus project.
“At any point in time, it’s a moving target from year to year,” he said. “There are contracts within the project that aren’t completed yet, so it’s sometimes difficult to pin down the final number. Sometimes they go up for a variety of reasons and sometimes they go down.”
Meehan, meanwhile, attempted to allay Gisriel’s concerns about the changes in the cost and the perceived lack of information.
“I’ll check with [Budget Manager] Jennie [Knapp] and I think she should be able to get some of those answers,” he said. “They are committed to giving you a complete summary when the project is completed and hopefully that will resolve your questions.”
