City $98.5-million Budget up 24%, Funded by 1.1-cent Tax Rate Hike

OCEAN CITY – Ocean City’s City Council meeting Feb. 25 opened with 30 minutes of citizen comments. Mayor Jay Gillian did not attend as he had pneumonia.
Thanks, Let’s Clean Up Gateway
Residents’ topics included appreciation from a parent that the skate park is running and “My children come home physically tired and ready to do their homework since they know no skate park the next day if not.” Another urged council to pay more attention to the 34th Street entryway saying, “I really am encouraging you to get aggressive to clean up this area, especially the two abandoned gas stations, and find a solution before the start of this summer season.”
“Coast Cottages” Concept
Other comments addressed the concept of “Coastal Cottages,” recently put into action, whose main purpose is to construct homes to stimulate residence by year-round inhabitants at the mid-range price. Later, council approved introduction and first reading of a resolution amending a zoning and land development ordinance to revoke Coast Cottages. According to Administrator James Mallon, “It’s time to review the ordinance we have in place since we’ve had success with this new idea but there are also shortcomings. There is definitely good progress with families and retired residents moving in but we’d like to review it before Coastal Cottages moves forward to other sections of the city. We want to stop and assess this progress. Council, please give us time to do this assessment.”
Per an overview by Mallon, 18 Coastal Cottages have been built at Eighth Street with 12 sold and of these eight are being occupied by year-round families.
A builder from Margate, representing the Palmer Center, received permission to address council on Coastal Cottages.
“We have been through multiple reviews; we’re now hearing that the planning board sub-committee is going to take action even though it’s not authorized to do so. There were no objections before that are now being raised here; none were ever mentioned in the multiple applications we’ve submitted. This is a long-term project, and you won’t be able to cure any procedural flaws once they happen.  You can’t circumvent state law and this project will go forward.”
Mayor’s Clarification
In Gillian’s absence Mallon read a statement from Gillian clarifying a few comments he made at the last council meeting.
“I want to correct any misimpression that I don’t appreciate the library and all that they do for the city. There is a formula for how they return funds to the city and in no way did I want to cast blame on anybody for the fact that the city can’t meet our hoped-for target of zero increase this year. We all are working hard to keep any increase close to that while maintaining the services that all residents, guests and businesses expect at the level that Ocean City has always given.”
Budget Highlights
In lieu of a budget workshop, Financial Management Director Frank Donato III presented an overview of the administration’s budget request for 2016 of $98.5 million, an increase of about 24 percent.
“Mayor Gillian was really pushing us hard to keep this budget at a zero increase to taxpayers.  As a result, we are still at only a 1.1-cent increase, which means a $55 increase for a $500,000 house with the average price of a home in Ocean City about $ 580,000. 
“And there is good news as well in that our tax collection rate has gone to 99.27 percent last year which is an increase from the previous year’s 99.04 percent. Ocean City has always had a very strong tax collection rate but we did dip below 99 percent in the late 2000s.
“Our ratable base has gone up by $140 million over last year and this is a great sign that our area continues to improve economically. We now have 258 full-time employees working for the city which is the same as last year. We went down as low as 250 in 2011 but realized that this low number went a little bit too far so we’ve been carefully adding by filling vacancies that happened through attrition and retirements,” he explained.
Donato went through numbers indicated by graphics and spreadsheets available online or through the City Clerk. He noted that the city receives only about half of all tax revenue it collects with the other approximate half going to the county at 24.8 percent of the total, school tax at 24.4 percent and library tax at 3.8 percent.
With reference to library operations. Donato said the city levies a tax for library operations and if there is any extra then, per state formula, the excess reverts to taxpayers as relief under a 2012 law.
The library’s reserve plateaued after it paid cash for the expansion. Instead of $3 million in reserve there is less than $500,000. This was expected but a discrepancy that I didn’t catch when we thought we could have a zero increase budget and I apologize for this.”
To contact Camille Sailer, email csailer@cmcherald.com.