OCEAN CITY – Mayor Jay Gillian’s 2025 budget proposal calls for a spending increase of 5.5% and a local purpose tax rate hike of 7%. If approved, the tax rate increase would come on top of a 7.5% hike last year, making for a two-year jump of 14.5%.
If the budget is adopted as presented March 27, the average assessed home at $645,000 would see the property owner paying an extra $242 in taxes for municipal purposes. Last year’s added tax on the average assessed home was almost identical, at $241.
The new budget totals $124.6 million, up from $119.1 million in 2024. It makes use of a tax rate increase of 3.76 cents, moving the local purpose rate from $0.534 in 2024 to $0.5716 in 2025.
Chief Financial Officer Frank Donato spent close to an hour presenting the administration’s budget to the City Council and the public on March 27. He said the impact of a 1-cent increase in the tax rate equals $10 per $100,000 of assessed value for the homeowner. For the city, with a ratables base of $12.94 billion, a 1-cent increase in the rate equals $1,294,000 in revenue.
The proposed budget makes use of $5.5 million of the current fund surplus, or 53% of the Jan. 1, 2025, balance of $10,400,062.
Embedded in the budget is a library tax with a levy set by the state at $7.7 million. Ocean City, like Avalon, maintains a separate library that is not part of the county system. The library returns to the municipal coffers $3.8 million of that tax revenue for support of the city’s general budget.
Donato said the chief drivers of added expense in 2025 were a rise of $1.6 million in salaries and wages, $2.9 million in debt service and $1 million in insurance costs. He also pointed to lesser but still significant increases in trash collection, utilities and pension expenses.
Echoing the complaints from residential property owners about rising electricity bills, Donato noted that the budget for electricity is up to $900,000, an increase of 20% above 2024.
For property owners, the local tax rate in 2024 represented 47.6% of the total tax bill, with the county tax at 28.3%, the schools at 17.7%, the library at 4.9% and open space at 1.5%.
This year’s proposed budget, like last year’s, is just under the state’s cap on appropriations. Last year’s 7.5% increase in the tax rate was the largest since the city underwent its last property assessment in 2015.
Donato said there were healthy revenue streams from user fees, with beach tag sales bringing in $5.9 million and parking $3.9 million. Local revenues of all types, including state aid, contribute $36.7 million to the revenue side of the budget.
The city saw a 12% increase in health premium costs, which now total $9.04 million. This comes just two years after the city ended its participation in the state health insurance plan.
According to the budget presentation, the city has 286 full-time employees, of which 82 are in the Police Department, 68 in the Fire Department and 58 in Public Works.
Gillian called taxes in the city “relatively low,” but not all who heard the presentation agreed. Year-round resident Kathleen Miller worried that the annual tax increases were putting a large burden on senior citizens, many of whom are living on fixed incomes. She said she hopes the council will find ways to lower the budget’s impact on property owners.
The City Council is expected to formally introduce a budget on April 10, with a public hearing and final vote on adoption scheduled for May 8.
Those wishing to see the presentation slides can find them here. The video of the presentation is here.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
