OC Officials Approve FY22 Budget Change

OCEAN CITY – With little discussion, resort officials this week approved fiscal year 2022 budget amendment number one, although a debate about the amount of room tax dedicated to advertising and marketing arose anew.

The council approved budget amendment number one on Monday. 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 last Tuesday’s work session, Budget Manager Jennie Knapp was prepared to present budget amendment number one for fiscal year 2022 to the Mayor and Council.

Typically, Knapp presents a detailed slide-by-slide presentation on the proposed budget amendment. Last week, Knapp reported room tax and parking revenues are expected to exceed what was budgeted. Pension expenses have been reduced. Grants received since the budget was adopted last spring are also realized in the amendment. Knapp’s presentation included a slide-by-slide PowerPoint, showing a balanced budget in most departments and categories, and gains in others, including room tax.

All in all, the estimated amount required from prior year reserves, or fund balance, increases from $3.4 million to $4.8 million. The additional uses of fund balance are due to prior-year purchase orders and prior-year advertising costs. The key indicator in the presentation were gains in room tax revenue, which almost always sparks a lively debate.

Under the town’s allocation formula, about 60% of room tax revenue goes into the general fund, while about 40% goes into advertising and marketing. Councilman John Gehrig said he could already anticipate the pushback on the room tax gains in the presented budget amendment.

“I’m sure we’re going to hearing soon from a constituency that calls us fools for spending money on advertising,” he said. “It’s nice to see that our room tax increased by about 20%.”

Gehrig said the room tax contribution to the general fund, to pay for fire and police and public works, etc., insulates property owners from tax increases.

“I’m just saying this for the public,” he said. “There is not a will among the council to discuss raising the property tax. Tourism is our business and the investment in tourism is yielding income that helps pay our bills. People say everybody knows where Ocean City is. This is not 1975. We need to defend our customers and we need to get new customers.”

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.