Ocean City Taxpayers to See 2.57 Percent Increase in 2014

Ocean City Taxpayers to See 2.57 Percent Increase in 2014

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City Hall in Ocean City

City Council adopted a 2014 municipal budget that calls for spending a total of $69,861,685 and raising $44,793,202 from local taxpayers (a 2.57 percent increase).

The bottom line: The owner of a $500,000 home In Ocean City will see an increase of $73 in municipal taxes (an increase of $14.60 for every $100,000 of assessed value).

That figure does not include school or county taxes. The Ocean City Board of Education will vote April 30 on a budget that calls for a 1.5 percent tax levy increase. The municipal budget and a small library tax accounted for about 50 percent of a property owner’s tax bill in 2013. The other half was divided evenly between county taxes and school taxes.

The budget passed in a 5-2 vote with Councilman Scott Ping and Councilman Pete Guinosso dissenting.

In the eighth and final budget vote of his two terms, Ping said he would not support the budget because he knew it could be better. He said he was frustrated that the city administration had never seriously considered an Ocean City Fire Department staffing proposal he believes could have saved the city hundreds of thousands of dollars. Guinosso said he does not approve of the city’s efforts to improve various cost centers that operate at a loss (such as the Ocean City Aquatics and Fitness Center, Ocean City Pops and Ocean City Municipal Airport).

Much of the debate Thursday centered on a proposal by Councilman Keith Hartzell to tap into $250,000 of the city’s record-high $5.8 million fund balance for taxpayer relief or to complete a couple road projects.

Finance Director Frank Donato said the balance was high because of a number of one-time factors from 2013. He said a healthy balance is the most significant factor in determining low interest rates for the $10 million per year in borrowing Ocean City plans for the next five years.

Hartzell’s proposal would have required City Council to re-advertise the budget and delay the final vote for two weeks, so in the end, he settled for a symbolic $86,000 addition to the city’s capital improvement fund. The vote to move the money passed in a 4-3 vote with Councilman Mike DeVlieger, Guinosso and Ping siding with Hartzell.

As in recent years, the burden of tax increases will not be shared equally.

The owner of a $500,000 home that was one of 4,500 that were reassessed by the city this year will pay less in taxes. On average, that home is reassessed at about $40,000 less, and the owner will see a decrease of  more than $80 in municipal taxes. The rest of property owners will see a 3.78 percent tax increase as the tax rate climbs from 38.6 cents to 40 cents on every $100 of assessed value.

With a three-year, in-house program to reassess 17,000 properties in Ocean City now complete, tax rates should begin to stabilize, according to Donato. After years where as many as 800 properties won tax appeals, only 55 did so this year, he said. Ocean City’s ratable base fell by about $135 million this year.

On the expense side, Ocean City’s biggest budget item is salaries and wages for 256 full-time employees. Contractual increases led to a 2.2 percent increase to $28.6 million. A spike in claims in 2013 led to a 19 percent increase in employee health benefits to about $7 million.

While Ocean City’s tax levy increases by 2.57 percent, the budget falls $305,000 under the state-mandated 2 percent cap because of various exceptions in the tax cap formula.

See more detailed information on Ocean City’s 2014 municipal budget.