Mayor Jay Gillian delivers his State of the City address.
Mayor Jay Gillian announced Thursday night during an otherwise upbeat State of the City address that local property taxes will go up in Ocean City's proposed $124.6 million budget this year.
Higher costs for municipal salaries, pensions, healthcare, insurance and debt service are among the escalating budget expenses that will cause a 3.7-cent hike in the local tax rate.
Frank Donato, the city's chief financial officer, said the proposed tax increase would add an extra $242 annually to the local tax bill on a typical Ocean City home assessed at $645,000.
In an interview, Donato said Ocean City is not alone among municipalities that must raise taxes this year to deal with higher expenses and inflationary pressures in general.
"Everything is up 2, 3, 4 cents," Donato said of the typical increase in the tax rate in the budgets of other towns and cities. "Inflation is certainly a factor."
Donato will give a detailed presentation on the budget during the March 27 meeting of City Council. The governing body is expected to introduce the budget at the April 10 meeting and take a final vote on May 8.
Council and the mayor's administration will collaborate on the budget before a final vote is taken. Council has the power to make spending cuts or other revisions if it wants to pursue that option.
In his State of the City address, Gillian indicated his willingness to work with Council on ways to possibly lessen the impact of the tax increase.
"I want to ask Council to join me in looking for new revenue solutions and other efficiencies, if we want to further reduce the burden on taxpayers," he said.
City Council will begin scrutinizing the proposed 2025 budget and is scheduled to take a final vote at its May 8 meeting.Unless the proposed $124.6 million budget is changed, spending will increase by about $5.5 million compared to the $119.1 million budget in 2024. The 2024 budget also included a 3.7-cent increase in the tax rate.
"Despite all the increases in health benefits, labor contracts and other costs, the tax rate increase will be the same as last year: 3.7 cents," Gillian said.
Overall, local property taxes remain relatively low in Ocean City, making the resort town an attractive place for residents to make their homes, the mayor said.
"It's a dream for people to live in Ocean City. One reason they can move here is because of our relatively low taxes," he said.
Underscoring his remarks, Gillian named a litany of municipal services, programs and community attractions that he said make the city inviting to homeowners, children, veterans and senior citizens.
"We're all blessed to live in this beautiful town. Compared to other places, our problems are small and our future is bright. That's not to say we don't have our challenges," he said.
Reflecting what Gillian described as the town's widespread appeal, he pointed out that the average sales price for an Ocean City home has more than doubled in the past 14 years - from $580,000 in 2010 to $1.3 million in 2024.
"Ocean City has way more to offer than other towns," he said. "Our homes are one of the most important investments we make. Everything we do enhances that investment."
The new police substation overlooking the Boardwalk at Eighth Street is one of the major projects Ocean City is building this year.In his remarks, Gillian also outlined major projects and infrastructure improvements that the city has undertaken in recent years and will continue to make with the help of local tax dollars and state and federal grants.
They include:
