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Monday, June 17, 2024

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Ocean City Adds $150M in New Debt to Capital Projects Plan

Ocean City Adds $150M in New Debt to Capital Projects Plan

By Vince Conti

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OCEAN CITY – The city’s $113.7 million municipal budget for 2024 barely made it under the state appropriations cap and calls for a jump of 7.5% in the tax rate for local purposes, the largest one-year rise in the city’s municipal tax rate since the last property reassessment in 2015.

In addition, the city plans to add $150 in new debt as part of the 2024 capital plan, including $67 million for projects scheduled for this year.

The local purpose municipal tax rate increased by 3.71 cents per $100 of assessed value, moving from $0.497 in 2023 to $0.534 this year, a jump of 7.46%. The added tax on the average assessed home of $650,000 will be $241.

This year’s budget was up by about 13% over the 2023 budget of $100.7 million.

The City Council’s May 9 vote on the new budget was 5 to 1, with Councilman Tom Rotondi voting no. Rotondi said he felt the city should be able to “do more with less.”

Rotondi was particularly critical of spending on personnel, saying the city has positions it could trim without reductions in service.

City Finance Director Frank Donato said inflation had a significant impact on the budget, causing it to “squeak by,” just $3,451 under the state’s 3.5% maximum increase spending cap.

Total 2024 budget revenues rose by just under $13 million over 2023. Almost half of that, $5.8 million, comes from the increase in the local tax rate. Another $3.5 million in additional revenue comes in the form of grants, including Federal Emergency Management Agency funding for raising structures to prevent flood damage. The budget also makes use of $3.7 million in non-recurring American Rescue Plan dollars, where it used only $400,000 in 2023.

The city made use of $6 million in surplus funds to offset taxation, leaving a remainder of $5.4 million in the surplus balance for future use.

The city has a separate library tax revenue line item of $7 million that supports a library that is independent of the county library system.

For taxpayers, about 48% of the total property tax bill goes for the municipal budget, with the rest for county, school and library taxes.

In terms of expenditures, the 2024 budget allocates roughly $38 million for salaries and wages, a growth of 7% over 2023. Full-time staff positions increased by 16 positions in the combined 2023 and 2024 budget years.

Along with a $2.5 million increase in salaries and wages, the new budget shows an increase in debt service of $2.4 million. Debt service is up by more than 33% in the combined five budgets after 2019.

A sizable portion of the $150 million in new debt, $67 million, is scheduled for 2024 projects, including a $30 million renovation of the public safety building, $6.5 million for a boardwalk police substation, road construction, flood mitigation projects, dredging and widening and repair of northern parts of the boardwalk. Grant funding will help with a number of the capital projects.

As of the start of the year, Ocean City had $134 million in permanent or bonded debt and $70 million in temporary notes or unfunded debt.

A slide in Donato’s public presentation of the budget shows debt service growing out to 2033, with sales of new debt listed for 2024, 2025, 2026 and 2028.

Contact the reporter, Vince Conti, at vconti@cmcherald.com.

Reporter

Vince Conti is a reporter for the Cape May County Herald.

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