Ocean City

Small shift in rate balances minor difference in revenue

(April 9, 2021) Ocean City property owners may see an almost imperceptible increase in taxes in 2022, as resort government’s budget proposal for the next fiscal year calls for an increase of about two-hundredths of a cent increase in the tax rate– or the equivalent of 80 cents on a home worth $400,000.

City Manager Doug Miller and Budget Manager Jennie Knapp presented their draft of the 2022 budget to the City Council on Tuesday afternoon, with a general fund of $90.6 million as compared to $88.7 million in 2021.

That 2.17 percent increase in the general fund over last year, is the smallest jump in an overall financial package that is forecast to go up 16.37 percent to $157 million from the $135.5 million in the current budget.

The total budget includes enterprise funds such as water and wastewater, which support themselves through fees for services, while the general fund is supported by taxes and other revenue such as parking fees, room taxes, licenses and permits.

The budget presented this week is a first draft and is likely to change over the next few weeks as the council meets to discuss the needs of each department.

Knapp told the board that each year’s budget presents a unique set of circumstances, and Miller said 2021 was a difficult year because of uncertainties related to covid-19.

Still, Miller said the proposed budget satisfies the needs of the many departments.

The new budget is based on the the state-calculated constant yield rate of 45.61 cents per $100 of assessed value, which would be up the tiniest fraction from the current rate of 45.59 cents. The nudge upwards in the rate balances out the slight decline in the resort’s assessable base for the upcoming year.

According to state tax assessment figures, the Ocean City tax base dropped from $9.256 billion to $9.253 billion, a difference of about $3 million in taxable property. The constant yield adjusts for that difference by slightly upping the amount of tax revenue properties produce.

Last year, the city collected $42,033,993 in revenue from property taxes, and for 2022, it would be $42,252,082 as currently forecast. Knapp said, however, the number will change in July, after the budget is approved and more firm figures begin to get reported.

“Every number in this budget is an estimate,” she said. “I don’t have any actual numbers for anything.”

This is especially true when it comes to how much the city puts into employee benefits like healthcare, where plan declarations have to be made for 2022. Someone may have a full family plan and want to reduce it to an individual plan, or individual plus one, resulting in less money coming from the city.

Knapp, being the master of a balancing act between the town’s financial needs and wants, said this week that if the tax rate were to remain the same at 45.59 cents per $100, Ocean City would be short a little less than $18,000. That means, the money would have to be accounted for somewhere else.

But one thing Knapp would not look at is a reduction in staffing.

In fact, the new budget calls for the hiring of 21 full-time employees, including nine police officers, six EMTs, six public works maintenance workers, and one communications operator to handle 911 calls.

From salaries alone – not including pension and benefits – the total impact on the general fund from hiring these 21 employees is $920,057.

The budget looks to improve core services in Ocean City by investing $40.3 million into public safety. This includes a $587,000 increase in the Public Safety pension plan, $517,000 into fire equipment, a $170,000 repair to the elevator at fire headquarters, a $110,000 upgrade to a power supply, and a nearly $15,000 radio system software upgrade.

In addition to core services, the budget also aims to invest $2.6 million in protecting the beach, $6.2 million in trash removal and $2.3 million into beach replenishment and Boardwalk re-decking.

There are several investments included in the budget to improve quality of life in Ocean City including $5.6 million in tourism marketing, $2.8 million in special events, $5.1 million into recreation and parks, along with additional funding for transit, the convention center, and airport upgrades.

Knapp presented several considerations for the future, including a bump in the room tax to more than 5 percent, and the continued impact of increasing the minimum wage to $15 an hour.

A copy of the budget proposal is located on www.oceancitymd.gov, along with a calendar of hearings by department, which will take place between April 7 and April 20.

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