Ocean City introduces budget that includes modest tax increase

City Council unanimously introduced a $125.4 million municipal budget Thursday night amid warnings from Mayor Jay Gillian about “Monday morning quarterbacks” who think they are experts in cutting spending and taxes in an election year.

Gillian’s proposed budget would raise the local property tax rate by 2.4 percent in 2026 unless spending cuts are made by the governing body.

The increase translates into a 1.38-cent tax hike that would add an extra $89 annually on the local tax bill for the average Ocean City home assessed at $650,000.

With the increase, the total local property tax bill for the owner of a $650,000 home would come in at $3,807, said Frank Donato, the city’s chief financial officer.

County and school taxes are separate from the local property tax bill.

Council will begin scrutinizing the spending plan now that it has been formally introduced. A public hearing and final vote are scheduled at Council’s May 21 meeting.

“This is a no-frills budget that properly addresses all of the services and improvements that our residents, our taxpayers and guests have come to expect,” Gillian told Council.

Council introduced the budget by a 7-0 vote. No formal objections were raised, but Councilman Keith Hartzell indicated that he had “some reservations to take care of” before he would cast a final vote on the budget.

This is Gillian's election year budget. Mayor since 2010, he is running for his fifth, four-year term in the May12 municipal election. He will be challenged in the mayoral race by Hartzell and City Council Vice President Pete Madden.

Noting that the election is approaching, Gillian warned of the “crazy times with all the experts on the budget and what we do and don’t do right – all the Monday morning quarterbacks.”

“I know people always want to talk about cutting, and all these different things. Every day we do that. I mean the decisions we make on a daily basis, we cut taxes,” Gillian said.

Gillian expressed complete confidence in Donato and the city’s municipal auditor, Leon Costello, for their financial expertise in crafting a budget each year that puts the reins on spending and taxes.

“I know that you’re admired by a lot of other cities and they would love to have you,” the mayor said to Donato while thanking him for his work on the budget.

    City Council will scrutinize the budget leading up to a final vote scheduled for the May 21 meeting.
  

When Gillian first unveiled the proposed budget in March, it was originally for $118.5 million. But the total budget has increased to $125.4 million now because the city has added grants it will receive for city projects.

The grants include a $3 million donation from Berger Realty owner Leon Grisbaum to help the city build a new airport terminal.

A $5 million grant from the New Jersey Department of Environmental Protection will be used to restore the eroded shoreline of nearby Shooting Island to create more storm protection for Ocean City.

Donato emphasized that although the total size of the budget has increased because of the grants, the amount of spending and proposed tax rate remain the same as in the mayor’s initial budget proposal.

The city will use $5.5 million in surplus funding to help finance the budget, while keeping nearly $4.8 million in reserve, according to the spending plan.

Beach tag sales, parking charges, municipal fees and permits, investment income and state grants are traditionally some of the big sources of revenue that finance the budget along with local taxes.

During the public comment portion of the Council meeting, local resident Dave Hayes raised concerns about the city’s string of tax increases in the last four years amounting to a total of 22 percent.

Hayes asked Council to provide more information about cost-savings ideas that were discussed by city officials during last year’s budget cycle for employee benefits and pensions.

In other business Thursday, Council introduced a nearly $23.5 million bond ordinance that will finance an array of construction projects and infrastructure improvements proposed in the city’s 2026 capital plan.

Big ticket items include the reconstruction of the Boardwalk between 14th and 16th streets, a beach replenishment project, and road and drainage improvements from 18th to 26th streets and in the Ocean City homes neighborhood.

The bond ordinance is scheduled for a public hearing and final vote at Council’s May 7 meeting.

    The former public safety building, dating to the late-1800s, will be demolished to make room for construction of a new headquarters for the Ocean City Police Department.
  

In another major vote, Council approved a nearly $1.1 million contract for the demolition of the city’s former public safety building. The contract was awarded to Pennsylvania-based TAMCO Construction Inc., the low bidder.

The contract includes a $500,000 contingency for the removal of contaminated soil from the site, if that is needed as part of the demolition work, city spokesman Doug Bergen said.

After years of discussion and debate, city officials have agreed to tear down the antiquated, late-1800s building to create space for construction of a new police headquarters and municipal court on the same spot at 835 Central Ave.

Design work for the new public safety building is still in the works, Bergen said. The tentative schedule calls for going out to bid this summer for the new building. Construction would take place from October 2026 through May 2028, according to the latest plans.

The police department moved out of the old public safety building in early March. Serving as the department’s temporary headquarters at this time is a new $6.1 million police substation overlooking the Boardwalk at Eighth Street.