OCEAN CITY – The Ocean City Mayor and Council got their first look this week at a budget amendment for the current fiscal year 2021 budget, and while the town did take a hit on the revenue side the losses were not as bad as once expected.
During fiscal year 2021 budget deliberations last spring, in the height of the pandemic, resort officials expected the spending plan to be a moving target. Many special events were cancelled or postponed, the number of visitors to Ocean City declined and many of those who did come stuck close to home and did not go out to restaurants and amusements and other attractions.
The Boardwalk tram did not run and the municipal bus service was limited. Room tax was down significantly, especially during the peak months of July and August and the budget was impacted in a myriad of different ways on the revenue side. However, expenses were cut in kind in many budget categories because of COVID.
The jury is still out on the remainder of fiscal year 2021, which ends on June 30, especially with expected impacts of COVID through the spring and early summer, but for the moment, the impact on the budget has remained manageable. Budget Manager Jennie Knapp presented a budget amendment to the Mayor and Council on Tuesday and the news was not as bad as once anticipated.
“We’ve revised the number for this year,” she said. “Actually, we’re in pretty good shape.”
The budget amendment is a weighty document full of dizzying numbers difficult for non-accountants to understand. At the end of the day, however, the net difference between anticipated revenue and expenditures boiled down to around $400,000. In the revenue under budget category, parking fees took the biggest hit at around $972,000. Sunfest revenue was down about $444,000 and admissions taxes were down $415,000. Room tax, a barometer by which revenue in a season is typically measured, was down just $120,000.
Room tax was down nearly 18% in July and another 20% in August. However, there were months, including September and November, when room tax revenue exceeded expectations. As of this week, room tax was down about 14% for the current fiscal year.
On the plus side, there were certain categories in the budget amendment where revenues are exceeding expectations. For example, parking fines were up by $365,000, the city received a $300,000 grant from the county for providing ambulance service to West Ocean City, and the town got roughly $263,000 in CARES Act funding from the federal government.
Police tow fines were also up by about $175,000, largely because of changes to the tow ordinance implemented in advance of the fall pop-up car rally and cruising events. All in all, in the budget amendment presented this week, areas where revenue exceeded what was initially budgeted came in at roughly $1.4 million.
On the expense side, there were some reductions driven largely by COVID-related issues, particularly on reduced salaries and special events. At the end of the day, the difference between the anticipated budget and what actually has happened thus far is about $400,000, which, all things considered, was not entirely bad news in what was once considered to be a potential disaster because of the pandemic.
Council Secretary Tony DeLuca praised Knapp for amending the balanced budget in what has been a decidedly trying year.
“So, what I heard is we had a net $724,000 reduction in revenue, but $620,000 of that were purchase orders from the prior year that we knew about,” he said. “The difference is roughly $100,000. We still have $10 million-plus in reserve. In a COVID year, you did a really nice job. It’s really pretty remarkable.”
Councilman John Gehrig pointed out the town ended the last fiscal year on the upside in terms of contributions to the general fund balance, but has since almost given back those gains in the current budget amendment.
“Basically, we closed out fiscal year 2020 by adding $2 million to the fund balance,” he said. “Now, we’re getting hit with a $2.4 million loss. In a year of COVID over two fiscal years, it’s basically a $400,000 reduction in fund balance.”
Gehrig said not all of the net losses could be blamed on the pandemic.
“What impact has COVID had on us versus losses that were not COVID-related?” he said. “A certain percentage of the $400,000 loss was by choice.”
The council voted unanimously to forward the proposed budget amendment to Monday night’s meeting for a first reading.
