OCEAN CITY — The proposed 2024 municipal budget will raise the tax rate 7.5 percent, or 3.71 cents per $100 of assessed valuation. If approved on final reading, the tax bill on the average home assessed at $650,000 would climb $241.
Ocean City Director of Finance Frank Donato presented the budget to Ocean City Council at its 10 a.m. Thursday meeting. The total budget is coming in 9.3 percent higher than 2023, when it was $100.7 million. The proposed budget is $110.1 million, an increase of more than $9.3 million. The 2024 budget includes a $68.2 million tax levy, up some $5 million from this year’s 2023 budget.
For perspective, the budget was $73.15 million a decade ago.
The presentation included trends showing how the local tax rate rose from 35.6 cents per $100 in 2012 to 49.7 cents in the 2023 budget to 53.4 cents in the 2024 budget. Over the same period, Donato showed how the city’s ratable base changed over the years, including drops from 2012-14 during reassessments and then a steady climb from 2015 on.
The ratable based was $12.17 billion in 2012, falling to $11.29 billion in 2015. It rose consistently from then, including $260 million in 2023 and another $216 million in 2024, helping offset higher increases in the tax rate. Ocean City’s ratables now stand at $12.77 billion.
Since 2015, Donato said, “we’ve seen 10 years of steady, attainable growth of $100-plus million a year, which helps our budget every year.”
“We’re in a really good era right now,” he said. “The real estate market remains strong.” Donato added that he doesn’t foresee a dip like the city experienced around 2005, but that it could plateau.
The proposed spending plan shows seven expense categories in which there are substantial increases totaling $6.9 million.
“These are the big-ticket items that are driving a tax increase this year,” Donato said.
The top is salaries and wages, rising by just shy of $2.5 million. Salaries, wages and related benefits comprise more than half of the city’s budget, he noted. “We’re a service industry. It’s no surprise people are the No. 1 cost.”
Debt service is up by almost $1.74 million and insurance up by just over $1.2 million. Departmental expenses climb $578,000, utilities are up $361,000, pensions by almost $279,000 and trash and recycling fees by $238,000.
Full-time staffing in city government is the highest it has been since 2005 with 285, according to Donato. That number had dropped as low as 250 in 2011, but climbed up to 276 last year before rising again to 285 in the 2024 budget.
Fire and rescue personnel account for 69 of those positions, matching last year and up from a low of 61 in 2012. The police department had a low of 70 positions from 2014-16 but also rose steadily since then to reach 84 in 2021. The 2024 budget shows 85 employees.
Because there has been substantial shuffling of personnel in some other departments, it is harder to show trends. The administration went from 12 personnel in 2006-2010 to a high of 30 in 2017, down to nine in 2020 and eight in the 2024 budget.
For the 2024 budget in full-time staffing, there are 23 positions in community services, 78 in operations and engineering, one in legal (consistent since 2010), eight in statutory offices, 13 in financial management.
Public works employees moved into the operations and engineering category in 2020. Donato said staffing changes over the years were based on the needs at the time, citing the more recent increases in the police, fire and engineering departments. He added the additions are carefully thought out and based, in part, on the resort becoming more of a year-round community.
Donato did point out there is roughly $5 million in seasonal salaries revolving around the summer, including lifeguards and additional police officers.
Looking at expenses, health insurance costs have climbed just over $1 million since 2014, from $7.04 million to the proposed $8.07 million in 2024.
Total pension costs have risen more than $2 million over the past six years, from about $5.4 million in the 2019 budget to more than $7.4 million in the 2024 budget.
Debt service hits a new high of about $20.7 million in the 2024 budget, mostly to pay for the city’s ongoing infrastructure and flood mitigation work. Debt service was $13.4 million in 2018 and up to $18.6 million in this year’s budget. Donato pointed out it has grown an average of 7.6 percent since 2018.
Many areas of anticipated revenues are up somewhat from the 2023 budget, but flat or down from what the city actually realized in 2023. For example, the city had $5.2 budgeted for beach fees in the 2023 budget but realized almost $6.1 million. The 2024 budget includes $5.8 million in beach fees. Donato pointed out Ocean City is fortunate to have more sources of revenue than many other New Jersey communities, mostly from tourism and the busy summer season.
Parking regulations are budgeted at $4 million, flat from what the city received in 2023. The Aquatic and Fitness Center is expected to generate $1 million in revenue in 2024, up from the $900,000 budgeted for 2023 but down almost $100,000 from what the city actually earned.
State aid is expected to be up $123,000 to $2.39 million.
The library is expected to return $3.46 million to taxpayers, up from the $2.66 million it returned in 2023. Donato noted the library’s budget increased more than $1 million because it is funded through a levy on the city’s ratable base, going from $6 million to $7 million. He said because the library doesn’t need that much to operate, the library board returns the excess to the city, which is about half of its levy for 2024.
Overall, local revenues are projected at $28.1 million for 2024, down from the $28.4 million realized in 2023 but up from the $25.8 million budgeted in 2023.
To help offset taxes, the Ocean City spending plan expects to use $6 million of the city’s fund balance or about 52.5 percent of the $11.4 million in the account. Officials like to maintain a substantial fund balance in case of major unexpected expenses, for cash flow, to cover payrolls and to keep future operations and budgets stable, rather than using the entire thing to offset or decrease tax hikes, according to Donato.
Donato presented a pie chart showing the total tax rate of $1.071 per $100 paid in Ocean City. Of that, 49.7 cents or 46.4 percent went to the municipal tax, 31.1 cents or 29 percent to the county tax, 19.9 cents or 18.6 percent to the school tax, 4.9 cents or 4.5 percent to the library tax and 1.5 cents or 1.4 percent to county open space.
He said each penny on the tax rate equates $1.277 million.
– By DAVID NAHAN/Sentinel staff