No Tax Rate Hike in Ocean City’s ’19 Budget

OCEAN CITY – After a detailed presentation by city finance director Frank Donato, City Council unanimously endorsed a $78.88-million budget for 2019, one that slightly increases city spending while keeping the municipal tax rate the same as last year.
The budget includes a tax rate of 45.9 cents per $100 of assessed value. If approved after a public hearing and final vote in April, that would mean the owner of a house assessed at $600,000 – about average for Ocean City – will pay $2,754 in city taxes next year, in addition to school and county taxes. In Ocean City, the city taxes amount to close to half of the total tax bill, according to Donato’s presentation.
Add in a library assessment of 3.5 cents per $100 of assessment and it passes the 50 percent mark, with 24.7 percent of the property tax dollar going to the county, 21.6 percent to the school and 1.2 percent to the county Open Space fund.
In Ocean City, a penny on the municipal tax rate amounts to $1,182,000 million in city spending.
Helping the budget is an increase in more than $133.5 million to the city’s total ratable base, driven by new construction and expansion as well as increased property values. With a total value assessed at $11.8 billion, the city has seen a steady increase in value in recent years.
This has not been as dramatic an increase as was seen in the first decade of the century, but city officials hope that will mean the climb will not be followed by a sizable drop, as happened earlier this decade.
By far the biggest change in the budget as introduced, compared to what Mayor Jay Gillian presented at the end of February, is a reduction of more than $11 million, from $90.67 million. Donato explained to City Council that this was not a massive cut to city spending but in the anticipated amount of state grants.
Last year, he said, Ocean City did exceptionally well in state grants. Some grants come in every year, he said, but there were several large-scale, one-time grants, with funds covering dredging projects, grants to help individuals raise their homes, the reconstruction of Shooting Island in the back bay and other projects.
Donato described it as a record amount of grant money that flowed through the budget last year. This year’s budget anticipates almost $289,000 in state revenue, a number Donato expects to climb during the year, but he does not expect the city to bring in as much as the year before.
The only reason to include that funding in the budget as originally presented, he said, was to give a better comparison on city spending from year-to-year, so that it would not present an inaccurate picture to the council and the public on spending.
“I wanted to show you the real growth in the budget,” he said. “If you look at this, it looks like the budget is going down $11 million. I always like to show the apples-to-apples comparison when we give out the mayor’s budget. And the real growth was a few hundred thousand dollars.”
Some members of council wanted to ensure the city continued to go after grants aggressively. After a question from Councilman Anthony Wilson, Donato said the city has a de-centralized approach to grant applications, with some grant writing completed in-house, others through a consultant, and department heads charged with keeping track of grant opportunities.
“Frank, how do we make sure that we’re not missing any grants that are out there?” asked Councilman Robert “Bob” Barr. Some are essentially automatic, Donato said, in which the city may not even need to apply.
Others are announced through the League of Municipalities or through other sources, while there are some the city does not pursue if there are too many strings attached, for instance.
“We analyze every opportunity to see if it’s the best fit for us,” he said.
Ocean City brings in millions from fees and revenues beyond municipal taxes, including the two biggest revenue sources: beach fees and parking, which includes meters and city lots on the boardwalk. The budget anticipates $3 million from parking and $3.8 million from beach fees, primarily beach tag sales.
Beach tag sales fell short of what was anticipated last year, which meant a reduction in what the city will anticipate for 2019.
“Obviously we’re very weather dependent in a lot of our revenue sources,” Donato said. A string of rainy weekends hurt tag sales last year.