(Aug. 9, 2019) The Ocean City Council will have a $2.5 million line of credit with a local bank to draw from when it needs fast cash, but its vote Tuesday to set up the loan mechanism did not go unchallenged.
Before the council members voted, they jousted with frequent local government critic Tony Christ, who questioned the appropriateness of the city’s new financial approach.
The authorizing measure, Ordinance 2019-12, permits the mayor and council to establish a line of credit with the Bank of Ocean City that could be used as temporary funding for larger projects or property acquisition.
“Mr. (Councilman Mark) Paddack commented yesterday that many places do this; it’s a common thing,” Christ said. “[I] called Jim Peck, and he [said] that he doesn’t know any municipalities in the state of Maryland doing this.”
Peck is the research specialist for the Maryland Municipal League.
“So I would ask Mr. Paddack, before he votes ‘yes’ for it, [the credit] if he could cite a few of the places of the many places he told me last night that did this.”
Paddack said the line of credit he referenced in their conversation was specifically about the private sector for homeowners. He said he did not refer to the Town of Ocean City or any city governments.
Before Paddack could continue, Christ interrupted him, and countered that Paddack had specifically referenced municipalities.
“Obviously there are none, because Jim Peck said there were none,” Christ said.
Christ went on to say that he understood the “rigors” of spending that the council goes through, but said that this spending should not be misrepresented and that he was uncertain as to whether this decision required a change of the municipal charter.
Despite Christ’s objections, the council proceeded to vote unanimously to establish the line of credit.
In another decision involving finances, the council approved a budget amendment that recognizes revenue received that wasn’t in the original document.
Overall, the city’s general fund increased by $1.3 million, with all of that increase coming from grants.
Christ also raised objections about how this additional money is being spent.
“I noticed that $721,000 … of additional funds is being spent on advertising, which is in many people’s mind a very questionable expenditure, Christ said.
“Aside from the grant, which I guess is $353,000 of it, I was wondering where the rest of it came ... again I would voice an objection [for] the many people who aren’t present who think spending $6.9 million on advertising is … wasting a lot of money.”
Countering Christs’ assertion about advertising expenditures, Ocean City Budget Manager Jennie Knapp said the city has an ordinance that dedicates two percent of gross room revenue to advertising in the FY18 budget. The entire amount wasn’t spent during that budget year, so it was carried over to the next year.
Furthermore, she said, most of the increased funding for advertising — $373,225 — came from a state tourism grant, as well as another $75,000 advertising grant.
Addressing the leftover funding, she said $275,000 came from unspent Tourism Advisory Board funds, which were being re-appropriated to the FY19 budget.
Lastly, $6,636 worth of leftover advertising funding from FY18 went to the FY19 budget.
Knapp made it clear that this budget exercise was a reconciliation of budgets and accounts, and that no costs were generated.