(April 29, 2019) Although not officially adopted, the Ocean City Council concluded a recent series of public meetings on the $138 million fiscal 2020 budget with a wrap-up meeting on Tuesday.

In the wrap-up, council members discussed lingering topics and made some changes to the budget, although the bottom-line impact is not yet known.

Budget hearings began April 2 and the fiscal document is to set to be finalized next month. A first reading is scheduled May 6 and a second reading is scheduled May 20.

Items discussed during the wrap up included:

Tram fare increase

The council voted unanimously to immediately increase tram fares across the board by 30-33 percent.

Under the new fee schedule, the cost of a full fare will increase from $3 to $4, discount books will increase from $20 to $26, and unlimited passes will rise from $6 to $8.

Budget Manager Jennie Knapp said the last time fees were raised the city lost about 8 percent of its riders. She there was an “elasticity scale” that indicated raising fees 33 percent would cause a 10 percent loss in ridership.

According to budget documents, a 33 percent fee increase coupled with a 10 percent lower ridership would net $236,293 additional in revenue in fiscal 2020.

There were also indications that ridership may return over time.

“Essentially, we’ve been carrying almost the same number of passengers since 2006,” Knapp said.

The increase was designed, in part, to pay for new trams, which some councilmembers said they were concerned about for an unusual reason. They suggested the lack of indentation between the new seats could confuse riders and actually lead to fewer overall passengers.

Councilwoman Mary Knight suggested the friendly tram drivers simply ask riders to scoot over to fill a row, while Knapp joked there wasn’t a “standard tush size” to use as a measurement.

“I find it kind of disheartening that we’re hearing back today [about the seats],” Mayor Rick Meehan said. “When we discussed the trams and we discussed the number of riders that could ride the tram, and we discussed the change in the seats … that particular train of thought was never brought up.

“To bring that up and to state that at this time either means lack of planning on the part of transportation … or an afterthought. And both of those are discouraging,” he added.

Minimum wage increase

Knapp said the fiscal 2020 impact of the minimum wage increase would total $107,427.67. Wages are set to gradually increase from $11 to $15 per hour by 2025, according to legislation passed this session in the Maryland General Assembly.

Councilman Dennis Dare said the increase would have a domino effect on future budgets. He suggested the city start planning for future increases sooner rather than later.

“We need to … plan over those five years,” he said. “We’ve done this for years and years for water and wastewater … we plan accordingly, as far as setting a five-year rate schedule. I think we need to do the same thing here.”

Dare said that needed to be done to “treat the workforce fairly and protect the taxpayers.”

Council President Lloyd Martin agreed, saying the increase would only “get harder as it goes along” and have “a big, snowball effect.”

Knapp said local government was able to deal with the increase this year, but future years were likely to be much more problematic.

“This is a very serious issue for the town,” she said. “We’re going to see an 8 to 9 percent increase for the next five years.

“We were able to absorb it this year, because we combined the bottom three pay grades … which minimized the impact across the board,” Knapp continued. “But, we’re not going to be able to do that in year two, three, four and five … the impact is going to be significantly more in the years to come.”

Councilman Tony DeLuca asked staff to come up with a plan and report back by September, in time for the start of strategic planning sessions.


Knapp also fielded several questions about employee overtime, set to total just over $2.8 million in additional pay in fiscal 2020.

DeLuca said he was interested in tweaking the current policy to reduce costs, but Knapp said the city already follows State of Maryland guidelines for overtime.

“I believe the departments are managing it as best they can,” she said, adding, “most of it is in public safety.”

Councilman Mark Paddack said many overtime hours are spent on police staffing of events. He said the alternative would be to hire more full-time workers, which would likely be more costly.

“I think $2 million in overtime sounds like a lot, but it’s really not, unless we’re going to hire full-time employees and pay them a full benefits package,” he said.

DeLuca said the discussion “just proves to me that we need to talk about this” in more detail. “I think $2 million plus is a lot of overtime,” he said.

Meehan said it is a delicate issue.

“Particularly with the police department, you’re having your best people … out there during those [busy] time periods,” he said. “You can’t fill those positions with part-time people, because of the training required and because of the job that’s required out there.

“It’s a little bit different than maybe a private enterprise,” Meehan continued, adding, “It doesn’t seem like that big of a number when you’re really looking at the number of hours, and the number of people required to fill those hours.”

According to Meehan the decision came down to, “Do you hire more people, or do you continue to pay overtime, which in the long run probably costs you less [money] and still provides you with the quality of personnel you need to service those positions.”

Knapp agreed to return with a comparative analysis of paying overtime, versus hiring more workers.

Impact fees

Councilmembers were in favor of reducing or eliminating impact fees for single-family homes, and asked staff to look into doing so.

Planning Director Bill Neville said infrastructure impact fees are collected on vacant lots, while water and sewer impact fees are calculated according to fixture counts, up to 20 fixtures.

Based on a snapshot provided to the council, a selection of homes valued at more than $4 million recently led to $156,000 in impact fees.

Dare noted that vacant lots paid fees because municipal facilities were designed to accommodate the impact of those lots. Neville later added that waiving fees for vacant lots was a slippery slope, akin to waiving property taxes for vacant lots.

Dare also said there is a need to make Ocean City more livable.

“If we don’t maintain a core of people living in town, a lot of services are going to go away, because they need year-round residents,” he said. “The impact fees for a single family kind of counter that philosophy of being able to make it doable for people to build.”

Dare said the impact fees were “not that significant to the town budget,” but were significant to people building single-family homes in the resort.

“If we want to encourage people to live in town, to maintain businesses, especially in the offseason … I think we need to take measures to make it more affordable,” he said.

Meehan agreed, saying more single-family homes are residences than rentals.

“I do think it’s a good idea to be able to do something to encourage people to build single-family homes … in Ocean City. I think that’s important,” he said.

Neville asked the councilmembers to indicate by a vote their desire to waive the impact fees for single-family homes, which would allow him to explore the matter further. Councilmembers were unanimous in their support of the change.

Rental licenses, noise permits

Finance Director Chcck Bireley, in an email to Knapp, said it was his opinion the city was covering its costs to issue rental licenses and noise permits.

Changing topics slightly, Bireley said in fiscal 2018, rental licenses and business licenses accounted for more than $1.8 million in revenue to the town.

He said City Solicitor Guy Ayers advised the council that legal restraints allowed the city to recover costs, but not to profit from the licenses.

“I looked at it from that standpoint and I believe that we are recovering all of our costs from this,” Bireley said.

Asked by Councilman Matt James how long rental fees have remained the same, Bireley said they were last increased around 2008. James asked department heads to look at their time spent and work issuing permits, and Knapp said she would add that to the budget process for next year.

Knight also asked about business license penalties, which she said were “ridiculously low.”

“That’s something we can look at sooner rather than later,” Meehan said. “I’m not really … interested in raising business license fees … at this particular time, I don’t think it’s essential.

“But, as far as the fines go, that’s something we might want to look at and consider, because it makes people more aware of their obligation to purchase those licenses, rather than just put that off because it’s a nominal penalty,” He continued. “It causes extra work, it causes extra time for us to send out notices. That might be something that we want to look at, even in this budget wrap up, is … the penalties.”

James said he remembers a time when it “made more sense to not get a rental license and get caught … then just to get a license.”

Miller said that was a discussion the council could have, independent of the budget sessions.

Radio purchases

The council voted unanimously to purchase 15 handheld radios for the police and fire companies at an additional $38,366. Knapp said the radios were estimated to cost more than $52,000 if they were purchased after July 1.

Knapp said she worked with Ocean City Volunteer Fire Company President Jay Jester to find additional money for 10 radios for the fire company.

Additionally, the “in lieu of tax differential” grant from the county was $58,000 more than what was originally budgeted. About $14,000 from that covered the five radios for police, Knapp said.

Budget wrap

Ocean City Councilmembers on Tuesday discuss odds and ends of the fiscal 2020 budget during a wrap-up meeting. Public hearings to finalize the projected $138 million budget are scheduled May 6 and May 20.

Josh Davis is an MDDC award-winning editor and reporter at the Bayside Gazette and Ocean City Today newspapers, covering Berlin and Ocean Pines, Maryland. He is the author of three novels, including 'Vanishing is the Last Art' (2012). He lives in Berlin.

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.