By Donald Wittkowski
Ocean City’s finances are well-managed and in strong shape as the municipality continues to keep its debt structure low through conservative spending, according to the results of an annual audit presented to City Council on Tuesday night.
“I’m happy to report this is a clean audit,” said Michael Garcia, a partner with Ford-Scott Associates LLC, the Ocean City accounting firm that performed the 2016 financial review.
Garcia told Council that the audit did not uncover any errors or areas of concern, resulting in no negative findings or recommendations by his company. He noted that the city continues to have clean audits year after year.
“You have a well-run city when it comes to the financial areas,” Garcia said.
Garcia went out of his way to praise the city’s chief financial officer, Frank Donato, and his financial team for their work.
“It’s always nice to present an audit when it’s clean,” Garcia said.
At the conclusion of Garcia’s presentation, members of Council also credited Donato with keeping the city’s finances on solid footing.
“Frank is the Michael Jordan of what he does,” Councilman Bob Barr said. “We’re lucky to have him.”
Councilman Keith Hartzell said the audit shows that city property owners “are not going to get hit with a big tax increase.”
The audit, which is required every year, is a top-to-bottom review of the city’s spending, revenue, debt structure, payroll and other financial areas.
Donato said the audit will be posted on the city’s website at www.ocnj.us by Wednesday. Garcia made a public presentation on the audit during Tuesday’s Council meeting. Council met on Tuesday this week instead of its normal Thursday night meeting schedule.
Garcia told Council that the city is well within the debt limits allowed by state law, reflecting a conservative approach toward its revenue projections and overall spending.
“We budget very conservatively,” Mayor Jay Gillian said in response. “We’re very conservative and try to hit the numbers we can.”
Garcia said the city has a net debt of about $122 million, which is 1 percent of the town’s ratable base. That figure is well below the maximum allowable debt limit of 3.5 percent of the ratable base, he said.
Bonds and notes that finance public projects comprise the city’s debt. The city has strengthened its financial position through its habit of often paying off its debt quickly, which saves interest costs, according to Garcia.
“The faster you can pay it off, the better it is,” he said.
Local taxes primarily fund the municipal budget, but the city is also helped by a variety of income sources, including beach tag sales and parking revenues, that largely stem from its influx of summer tourists. The city’s budget forecasts $4.1 million in beach tag sales and $3 million in parking revenue for 2017.
Garcia said the city also has an extraordinarily high tax-collection rate of 99.29 percent. The figure indicates that the vast majority of property owners are paying their local taxes on time.
The city’s finances are also helped by the growing tax base. In 2017, for instance, the ratable base has increased by about $120 million compared to 2016 and now totals nearly $11.6 billion. The ratable base is the combined value of all taxable real estate.