By DONALD WITTKOWSKI
Ocean City added $262 million in new tax ratables this year and remains in strong financial shape overall, but rising costs will provide a challenge in the 2023 municipal budget, Mayor Jay Gillian said Thursday while delivering his annual State of the City address.
Giving a sneak preview of the proposed $98.9 million budget, Gillian said the tax rate will go up slightly less than two cents and he also intends to ask City Council’s approval for a small increase in the parking rates to generate more revenue.
Gillian noted that Ocean City is not immune to inflation and other rising expenses that towns are facing nationwide, including higher salaries, pension costs, healthcare benefits, trash hauling contracts and construction projects.
“Leon Costello, the independent auditor for Ocean City and other towns, said 2023 will be a year like no other with all the increases that local towns face. He said few towns will be able to keep local tax hikes to less than five cents,” Gillian said.
One way the city has been able to hold down healthcare costs is to change medical insurance providers, rather than pay a projected increase of more than 20 percent this year. That move alone saved taxpayers a penny on the tax rate, the mayor said.
Despite inflationary pressures, Ocean City’s finances remain strong overall, in part because the city has added $262 million in new tax ratables this year, he pointed out.
“Ocean City has always been a great place to vacation and even greater place to live. Through good times and bad, recessions, hurricanes and pandemics, our economy has remained rock solid. The state of the city remains strong,” he declared.
Especially since the pandemic began, the city has seen more and more people stay in town throughout the off-season. Metrics confirm that the daily population continues to grow, a trend that is benefiting local businesses. Gillian said.
“We continue to add new services while preserving the traditions we love,” he said. “We continue to invest in infrastructure to meet the needs of today and tomorrow.”
While upgrading its infrastructure, the city has spent millions of dollars on major projects such as road construction, flood protection for neighborhoods, the dredging of local waterways and improvements to playgrounds and athletic fields.
Gillian disclosed in his address that his administration will propose a new plan for building a modern police headquarters to replace the existing public safety building that is more than a century old.
“Without going into too much detail right now, our plan will involve adding a substation at 8th Street and the Boardwalk and converting the current police station on Central Avenue into a state-of-the-art facility,” he said.
“This will result in construction costs much less than what we had projected and will allow us to move forward with this critical improvement,” he added.
In 2020, the mayor proposed building a combined headquarters for the police and fire departments at 550 Asbury Ave. The estimated cost was $42 million. Council balked at the proposal, calling the price too expensive. Since then, Gillian has considered other, less expensive ways to build a new public safety building.
Gillian also used his address to tout Ocean City’s conservative fiscal policies. He said the budgets “make sure that we are always prepared for the good years and the bad years.”
He explained that his administration took a number of steps to limit the impact of this year’s budget on local taxpayers. The measures included city departments making significant cuts, the switch to another healthcare provider and a rebidding of the trash hauling contract to keep costs stable under a new company.
However, the proposed 2023 budget will include a 1.7-cent increase in the local tax rate. For a homeowner with a house assessed at $500,000, that will mean approximately an additional $75 in taxes per year, Chief Financial Officer Frank Donato said.
Donato plans to give a detailed presentation on the $98.9 million budget at the March 23 meeting of City Council. Assuming there are no serious objections from Council, the budget will be introduced in April.
The city has already approved an increase in the cost of daily, weekly and seasonal beach tags to generate extra revenue for the budget.
Daily beach tags went from $5 to $10 under the price increase, weeklies doubled from $10 to $20 and the cost for seasonal badges was raised from $25 to $35. The city will continue to offer a preseason discount on seasonal tags bought through May 31. The discounted price is $30.
Now, Gillian will be seeking Council’s approval for what he called “some small rate changes” in parking fees for more revenue in the budget.
In an interview after Gillian’s address, Donato said the proposed increase in parking rates has not yet been established. He noted that the city is talking to the Downtown Merchants Association and Boardwalk Merchants Association to get their input on the proposed parking rate increase.
The increase would be for both the parking meters throughout town and the municipal parking lots between 5th and 9th streets, Donato said.
