OCEAN CITY – Salary increases, additional public safety positions, and a tax rate above constant yield highlighted last week’s introduction of the fiscal year 2024 budget.
Last Thursday, City Manager Terry McGean and Budget Manager Jennie Knapp presented the Mayor and Council with the fiscal year 2024 budget, launching a two-week review process. The proposed spending plan for all funds totals $155 million, with the general fund making up more than $104 million.
“I truly believe that this budget is a responsible reflection of the resources each department needs in order to fulfill their mission and in many cases improve the current level of services that we provide,” McGean said.
The proposed fiscal year 2024 budget maintains the current property tax rate at $0.4526 per $100 of assessed value, which is slightly higher than the constant yield rate needed to provide the same level of revenue for municipal services as the prior year. McGean said the additional revenue generated would allow the town to fund four additional full-time police officers and eight additional firefighter-EMTs.
“It does reflect an increase in the constant yield,” he said. “The current property tax rate is 45.26 cents per $100 of assessed value. The constant yield rate would be 44.76 cents per $100 of assessed value. The additional revenue of $478,005 from assessment increases above constant yield is what is needed to cover the gap to fund the eight new full-time firefighter-EMT positions and the four new full-time police officers.”
McGean told the Mayor and Council part-time staffing shortages continued to be the town’s greatest challenge. While departments have implemented signing and retention bonuses, pay increases and housing stipends, he said more needed to be done to fill the ranks, particularly within the public safety sector.
“The proposed FY24 budget takes significant steps in police and emergency medical services,” he said. “We really have no choice but to continue the transition from a seasonal to a more full-time, year-round workforce in order to maintain the high levels of service that our residents and visitors demand.”
McGean told officials hiring full-time staff would reduce part-time and overtime costs, but that it would still impact the coming year’s budget. He said the proposed budget also includes pay increases for general employees and members of the Fraternal Order of Police (FOP) and the International Association of Fire Fighters (IAFF).
“The budget also includes all costs associated with IAFF and FOP contracts and increases salaries for all full- and part-time employees,” he said.
Officials note general fund revenue is estimated to increase $1.7 million. Under general fund expenses, the advertising budget is expected to increase $1.6 million, transfers to the transportation department are expected to increase $238,000 and transfers to the convention center are expected to increase $162,000.
Other budget highlights include a $2.7 million increase in estimated room tax revenue, an $85,000 increase in estimated casino revenue and a $20,000 increase in estimated income tax revenue. Under opera
Councilman Frank Knight questioned the town’s advertising budget.
“The increase in the advertising budget, is that based on the increase in room tax?” he asked.
Knapp said it was. She noted that 42% of room tax revenues are dedicated to advertising and tourism.
Councilman John Gehrig said he took issue with the way advertising was reported as an expense in the town’s general fund account.
“We need a way to report this differently because really advertising is making a contribution to the general fund,” he said.
McGean also highlighted capital projects included in the coming year’s budget, including street paving, canal dredging and more. Cost estimates for the approved projects total $3.3 million, with $1.5 million funded through fund balance.
“The city fund balance continues to be healthy, and this budget maintains that,” he said. “It does transfer $1.5 million from fund balance to the capital maintenance fund and uses an additional $1,086,000 from fund balance to pay for other one-time equipment costs such as variable message sign replacements, playground equipment and cardiac monitors, while still exceeding the minimum 17% reserve and leaving additional funds set aside for potential pension impacts.”
McGean told the Mayor and Council a review of the town’s budgets over the last decade highlighted the town’s ability to add projects and programs while keeping up with inflation.
“I think for us it’s been good,” he said. “I think we’ve been able to keep the budget indexed to inflation while adding services.”
He added that the town’s main source of revenue has also shifted from property tax to room tax.
“These fees can be much more volatile compared to property tax,” he said. “Therefore, similar to last fiscal year, there are some items I would like to revisit after the summer, once we have a solid, confidence level in room tax receipts, particularly another adjustment to the general employee pay tables to bring their pay increases more in line with those approved for the IAFF and the FOP.”
The proposed budget for fiscal year 2024 can be found on the town’s website. Budget work sessions continued throughout the week.