CAPE MAY – Cape May City Council Feb. 7 heard a proposal from its Municipal Taxation and Revenue Advisory Committee (MTRAC) to hike mercantile fees in the 2024 budget, while also pegging those fees to national inflation rates going forward.
MTRAC argues that the first increase in 2024 should bring the fees up 42.5% in order to account for national inflation.
MTRAC Chair Dennis Crowley made the proposal to council, citing the fact that mercantile fees brought in $468,743 in revenue in 2022 across a complex maze of 39 individual codes, from fees for housing cleaning services to a restaurant per seat charge to beach concession fees.
Over time, Cape May has accumulated a laundry list of mercantile fee codes that have not, according to Crowley, received the necessary attention to keep them in line with the cost of providing municipal services.
Crowley noted that most of the fees have not been increased since 2009. In that time, he said, city spending has risen 48%, and the national inflation rate is up 42.5%.
“Mercantile fees are part of how the city funds municipal services,” Crowley said.
The fee structure should, MTRAC maintains, reflect the rising cost of salaries and benefits, equipment and operational expenses, and the establishment of new or expanded services.
Crowley also argued that most of the fees charged to the merchants will, in the end, become user fees, as they are passed along to consumers and visitors to the resort.
“Forty-three percent sounds like a big number,” Crowley admitted, but “in many cases, it results in increases of just a few dollars that will be passed along.”
An important objective for MTRAC is keeping the city’s non-tax revenues in line with the consumption of city services, so that the burden of paying for those services does not disproportionally fall on the property taxpayers.
Through the use of its three self-financing utilities and its focus on miscellaneous fee revenues, Cape May has maintained the lowest ratio of taxpayer levy to general fund spending of any of the county’s island resorts from Ocean City to Cape May Point.
In 2022, the general fund budget for the city depended on taxpayer revenue for only 48% of budgeted expense. No other shore resort in the county was below 60%.
The MTRAC proposal would exempt three municipal fee codes from the 42.5% increase in 2024 since amendments to the fees for these three codes are contemplated in the 2023 budget currently under development.
The codes are the hotel and motel per unit fees, the tourist and guest house per unit fees, and the inside seating restaurant per seat fee.
For all others in the list of 39 codes, the recommendation is a 42.5% increase in the 2024 budget cycle. Thereafter, MTRAC proposes that all mercantile fees be pegged to the national inflation rate, with fees adjusted on a biennial schedule to reflect the previous year’s inflation rate, as published by the U.S. Department of Labor.
The presentation was not tied to any formal action by the council.
Thoughts? Questions? Contact the author, Vince Conti, at vconti@cmcherald.com.
