OCEAN CITY — A review of the town’s annual comprehensive financial report revealed everything came up rosy in the post-pandemic fiscal year 2021 with “significant gains” in nearly every major category.
Finance Director Chuck Bireley, along with Assistant Finance Director Shawn Bunting, presented the report to the Mayor and Council on Tuesday. Bireley explained revenues for fiscal year 2021 were budgeted at around $90 million and actually came in at a little over $95 million for a favorable variance of a little under $5 million. Conversely, expenditures were budgeted at around $84 million and came in at about $74 million, for a positive variance of $5.7 million. The change in fund balance was budgeted at $1.5 million, but ended over $9 million, resulting in a variance of $10.6 million.
“We had significant positive variances in revenue and expenditures,” he said. “The $10.6 positive variance in the general fund balance was the largest single level of growth in the town’s history.”
In terms of unassigned general fund balance, the amount went from $23 million in fiscal year 2020 or roughly 30 percent, to nearly $29 million in fiscal year 2021, or roughly 37%. The town’s long-stated goal for general fund balance as a percentage of expenditures has been 15%, but the desire in recent years has been to grow that to 20% and beyond. Now, however, it has grown to nearly 37%.
Bireley said key component of the increase in fund balance was an unexpected increase in room tax revenue, which increased nearly $3.5 million from fiscal year 2020. Because of the pandemic, resort officials often compare fiscal year 2021 to pre-COVID fiscal year 2019 as more of an apples-to-apples comparison. Still, room tax increased by over $2.6 million compared to 2019.
Another key component of the town’s financial success in 2021 came in the form of intergovernmental grants and subsidies. For example, Ocean City received $3.4 million in federal American Rescue Plan Act of 2021 funds during the fiscal year. In addition, state and county grants increased by nearly $1 million.
Another important factor was the town’s successes with its Post-Employment Benefit gains, or OPEB. The town’s OPEB liability decreased by over $6.5 million, and there were total investment earnings of $36 million in the benefit plans.
“The performance of the OPEB was stellar,” he said. “We actually had negative expenses in the OPEB.”
In terms of the town’s enterprise funds and business services for utilities and other user-driven entities, each came in with revenues exceeding expenses, with the exception of the convention center, which was expected.
In the transportation fund, COVID-related service cuts led to a $1.8 million decrease in revenue, but operating expenses decreased by $1.2 million. Federal relief grants for transportation totaling $1.1 million helped offset the losses. Eagle’s Landing golf course did well in fiscal year 2021 with over $550,000 in profit with no general fund subsidy.
The town’s assets came in at $367,657,746, while liabilities totaled $164,135,614, resulting in a net position of over $203 million.
“Where we stood at the end of the fiscal year was $203 million,” said Bireley. “That was an increase of 18.7% over the prior year. In closing, fiscal year 2021 was a very, very good year for the town of Ocean City.”
Mayor Rick Meehan said the growth in fund balance should likely be reviewed at some point because of how much it has exceeded expectations.
“We’re fortunate the town had a great year and there were a lot of things that played into that,” he said. “Usually, we talk about fund balance at budget time, but we should up that discussion in the near future so we can really evaluate where we are and what we’re going to do with next year’s budget.”
