OC Council To Retain Constant Tax Rate After Budget Sessions

OCEAN CITY — After a marathon two weeks of work sessions, resort officials last week wrapped up the fiscal year 2022 budget at around $158 million, while holding the line on the constant yield tax rate.

After finishing up the last of the individual departmental budget presentations last Thursday, the Mayor and Council decided to scrap the planned budget wrap-up session scheduled for last Friday and just push through the remaining loose ends to close it out. The budget will be formally presented for approval on first reading at the first meeting in May, but essentially the fiscal year 2022 spending plan is in the books.

The total budget for all funds is around $158 million, with the general fund making up around $91 million. The proposed fiscal year 2022 budget sets the property tax rate at the constant yield rate of .4561, which is slightly higher than the current rate of .4559. For the record, the constant yield is the property tax rate needed to generate the same revenue generated last year to provide the same level of municipal services and programs.

For many years, it was the town’s policy to set the property tax rate at the constant yield, but a couple years back resort officials broke from the tradition and set the property tax rate at the constant tax rate, or the same rate as the prior year, representing a slight decrease in property tax revenue.

When the budget was presented earlier this month, Council Secretary Tony DeLuca asked what changing the rate to the constant rate of .4559 would do to the bottom line. As it turns out, the ever-so-modest decrease would not move the needle much for resort property owners.

Last week, it was revealed setting the tax rate at the constant rate of .4559 as opposed to the constant yield rate of .4561 would save property owners about 60 cents on a property assessed at $300,000, around $1 on a property assessed at $500,000 and $2 on a property assessed at $1 million. The net difference is around $18,000, which is too small of a difference to warrant the change.

Budget Manager Jennie Knapp explained, while its largely semantics, setting the property tax rate at the constant rate instead of the constant yield could technically be interpreted as a tax cut. She said the town is in line for potentially significant federal grants through the COVID relief package passed through the state, grants that might not head this way if the town showed a technical tax cut.

“There is an additional grant we might be eligible for,” she said. “It’s the federal American Rescue Plan, but we haven’t been given a lot of information on that yet.”

Knapp said for the modest reduction, it wasn’t worth the risk of possibly missing out on the federal relief funds.

“My concern is reducing to the constant rate would constitute a tax cut,” she said. “I wouldn’t want to jeopardize a potential $6 million grant by doing that.”

DeLuca agreed in the end. He said his original question was based more in perception than the pennies on the dollar the change would result in.

“My original reason for keeping it the same was the perception,” he said. “For $18,000 total, it’s not worth risking a grant of $6 million.”

The town plans to transfer $3 million to create a capital reserve fund for pay-as-you-projects. In out years, $1.5 million would be contributed to the fund annually and a balance of $1 million would be maintained at the end of each year.

Pay-as-you-go projects funded in the fiscal year 2022 budget include street paving, continued storm drain cleaning, the Chicago Avenue bulkhead, replacing the gym floor at Northside Park and canal dredging, which will be re-evaluated after the summer. The total price tag for pay-go projects runs from $1.3 million to $1.7 million, depending on what is ultimately decided at a later date about canal dredging.

Other projects in the fiscal year 2022 budget that are included within the individual departmental budgets include replacing the deck at Sunset Park, new field lights at Northside Park, elevator improvements at fire department headquarters at 15th Street, and replacing the uninterruptible power supply (UPS) system at the Public Safety Building, which acts as a backup generator of sorts for the town’s vast communications network.

Other projects listed in an upcoming bond issue include the Baltimore Avenue renovation and utility undergrounding from North Division Street to 15th Street, the downtown recreation complex, storm drain outfalls, the Boardwalk re-decking. Replacing the midtown fire station was included in the future bond issuance as a possible project, but moved up the list when the council agreed last week to relocate Station 3 from its current location at 74th Street to 65th Street.

Before the council could close in on a final budget last week, there were still some loose ends to tie up in the wrap-up session. During the work sessions, each department presents their budgets and things come up that were not funded in the draft spending plan. The Mayor and Council make a list of those items and address them at budget wrap-up.

One item to remedy was the Ocean City Volunteer Fire Company (OCVFC) request to bring back its recruitment and retention position. Two years ago, with the volunteer company’s numbers waning and recruiting challenges arising for the volunteer service all over the area and across the state, the council agreed to fund in part a recruiting and retention specialist to address that issue along with handle outreach and monitor social media, for example.

The OCVFC paid the individual’s salary and the town paid the benefits. The arrangement was for two years, which has now expired, and the fire company wanted to bring the position back.

The cost to the town would be around $25,000. Knapp said the OCVFC so wanted the retain the position it was willing to give up a piece of apparatus requested in its budget as a trade-off of sorts.

“The volunteers are willing to give up a piece of equipment to fund this position,” she said. “It would be the same money in the budget.”

Knapp said the volunteer company was willing to give up a replacement jaws of life apparatus in order to retain the recruiting position. Council Secretary Tony DeLuca asked if the impact on the budget was the same.

“Is it apples to apples?” he said. “We’re talking about a piece of equipment versus a person. What about the salary and benefits.”

Knapp explained it was a part-time position and the money would be the same. She said she might be able to find a way to do both.

“There might be some savings in the line items and we still might be able to get this equipment,” she said.

During the wrap-up session, the council also agreed to honor a request for $25,000 from the Cricket Center, also known as Worcester County Child Advocacy Center. The Cricket Center develops strategies specifically intended to provide assistance to victims of child sexual assault and physical and sexual abuse in Worcester County.

Each year, various non-profits and other organizations make requests for grants and donations to the town, and how the money is allocated is typically decided during budget wrap-up. Last year, the Cricket Center conducted 193 total investigations in the county, 62 of which, or 32%, originated in Ocean City. After little debate, the council voted to include the organization’s $25,000 request in the fiscal year 2022 budget.

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.