OCEAN CITY — With little fanfare or discussion, resort officials last week signed off on the second fiscal year 2021 budget amendment after learning the town’s financial picture was rosier than expected.
Once a town’s fiscal year budget is struck, there are often budget amendments on different occasions throughout the year to make adjustments for unforeseen changes on the revenue and expenditure sides. Typically, funds are moved if there are shortfalls on the estimated revenue side, or redirected if a windfall is determined.
During a July 27 work session, Budget Manager Jennie Knapp was prepared to present budget amendment number-two for fiscal year 2021 to the Mayor and Council. Typically, Knapp presents a detailed slide-by-slide presentation on the proposed budget amendment. Perhaps because the news was generally good, and also because the work session had lingered late in the day, the council essentially rubber-stamped the proposed budget amendment and moved it to first reading without a lengthy presentation.
There was some justified trepidation heading into fiscal year 2021 with lingering COVID restrictions expected to curtail revenue in several categories including room tax, parking and bus and tram ridership last summer, for example. However, Knapp said those revenue dips were offset and then some by state and federal coronavirus grants.
“The main reason we ended up in such great shape is we received a lot of grant money because of COVID,” she said. “That helped us offset revenue losses for parking and the trams, for example.”
Despite COVID, revenue estimates for room tax, income tax, parking and towing fines increases by $2.3 million over what was estimated. The room tax increases in fiscal year 2021 resulted in an increase in the town’s advertising budget by over $384,000. COVID-related grant funding offset losses in the transportation division, as well as the convention center losses and risk management.
The estimated amount from prior year reserves, or fund balance, was reduced from $2.4 million to roughly $1.5 million. The net impact of the changes in the budget estimates was essentially an $891,000 windfall. Knapp said while certain revenue sources took a hit in fiscal year 2021 because of the pandemic, those losses were offset by an in-kind reduction in expenses.
“We fell like we’ll see a fund balance increase this year, largely because of the grants,” she said. “When we did have revenue losses, we were able to offset that with a reduction in expenditures”