OCEAN CITY — Ocean City Council voted April 27 to introduce the $98.9 million municipal budget that carries a 1.77-cent tax rate increase.
The budget is largely unchanged from when the Gillian Administration presented it to council in March. Spending is up nearly $8.4 million, or 9.26 percent, from the 2022 budget, but a combination of increasing ratables and new revenues has kept the tax rate increase under 2 cents per $100 of assessed valuation. The rate would rise from 47.9 cents per $100 to 49.76 cents.
The tax rate increase of 3.7 percent is well below many other communities across New Jersey, according to Ocean City Chief Financial Officer Frank Donato, who made a brief budget presentation at the council meeting. Many other communities are facing tax hikes of 5 percent to 10 percent because of a combination of inflation and fast-rising health benefits costs.
Donato said switching out of the state health benefits plan kept the tax rate from rising another penny.
Donato said the communities that were able to restrain tax increases were those that acted proactively, thought outside the box and found new sources of revenue.
“That is the case here in Ocean City,” he said.
Last fall, City Council approved beach tag fee increases and just approved parking fee increases at meters and raising the upper limit charged at parking lots from $20 to $25. Donato noted that it has been a number of years since parking or beach tag fees increased.
The beach tag increases are expected to bring in an additional $1.2 million over the $4 million raised in 2022 and meters are expected to bring in $3.975 million in 2023, about a half-million above 2022.
The city also is applying $5.7 million of its surplus to this year’s budget, leaving a similar amount in the account.
The total tax levy in the budget is about $62.38 million, an increase of just under $3.5 million from 2022. The amount to be raised by taxes is almost $2.7 million under the New Jersey local CAP law.
Donato explained by introducing the budget, council was taking ownership of it. It must be out for 28 days before returning before council for adoption. That will be at the second council meeting in May.
Occupancy fee raised;
Mayor councils caution
Councilman Bobby Barr said the administration did a very good job with the budget, but after meeting with Donato, Business Administrator George Savastano and others, they were discussing the possibility of an occupancy fee for VRBO and Airbnb rentals.
Barr said many towns have been using that mechanism in recent years and that he would like that to be part of the discussions as one of the ways to bring new revenues to the city. He called it “found money” that could benefit the resort.
Donato said the mayor has asked members of his administration to research the idea, gather facts and then report them to council.
When council Vice President Karen Bergman asked whether the occupancy fee would apply just to VRBO and Airbnb rentals or all rentals, including hotels and weekly rentals, Donato said that would be part of the fact-finding. He noted in other towns it extends to all rentals.
At that point, Mayor Jay Gillian interjected and cautioned council to wait until the fact-finding was done to prevent people from jumping to conclusions.
“Here is where we want to be careful,” he said. “You hear me say it all the time. We say something and it gets on chatter.
“Let’s get all the facts. We have a lot going on here. Without the whole story, someone who doesn’t like it takes one little thing and blows it up and next thing you know we have the whole room full. Give us time.”
By DAVID NAHAN/Sentinel staff