OCEAN CITY — If approved, Ocean City’s proposed budget would raise the tax rate 2.41 percent.
The budget proposed by Mayor Jay Gillian’s administration raises revenues and spending about $5 million over the current budget. It would increase the local tax rate to 58.58 cents per $100 of assessed valuation. The current tax rate is 57.20 cents per $100.
Salaries and wages are up just under $1 million to $40.668 million, debt service rises $1.46 million to $25 million, and other expenses are up $2.16 million to $38.9 million.
The overall spending plan comes in at $118.49 million. This year’s budget is $113.5 million.
“Despite all the fixed increases in labor and benefits costs, our proposed tax rate increase this year will be just 1.38 cents,” Gillian said Thursday evening during his annual State of the City address.
“The administration has been hard at work negotiating the best deals on employee benefits, cutting the capital budget and trimming the operating budget,” he told City Council. “We continue to seek grant funding to offset costs. Not including more than $100 million in beach replenishment funding, we have secured more than $60 million in grants since I took office.”
The mayor pointed out the debt service increase for projects — which includes major items such as the new police substation at Eighth Street and Boardwalk and the new police station in the works on Central Avenue — will go down by $1.4 million.”
“This downward trend plays out into the foreseeable future. This is exactly according to plan,” he said. “This administration set out about 12 years ago to complete desperately needed infrastructure projects, and we’ve completed almost all the major ones. Now we can move into maintenance mode.”
During Gillian’s tenure, the city has conducted a slew of infrastructure projects for many areas that had been neglected by previous administrations.
They include rebuilding the boardwalk from Fifth to 12th streets and the ongoing rebuilding of the north end of the boardwalk; multiple flood-mitigation projects that involve pump stations and raising roads; dredging that has made the bay and lagoons navigable; getting close to building a new airport terminal (offset by a $3 million donation from Leon Grisbaum);
reconstructing and paving the majority of roads and alleys in the city; buying land for open space, including the gas stations on Ninth Street at the entrance to town and the former car dealership lot at 16th Street and Haven Avenue; artificial turf fields at Carey Stadium and the Tennessee Avenue Sports Complex; and a new firehouse at 29th Street.
All of that came with tens of million of dollars in spending, and capital project plans supported by City Council.
The mayor cited his finance team for taking advantage of historically low interest rates and the city’s double-A bond rating that allowed the city to borrow money at low rates.
The administration has proposed another $70 million in capital projects over the next five years with $42 million of that planned in the coming two years and about $10 million a year after that.
According to Ocean City Finance Director Frank Donato, the city had $168 million in permanent or bonded debt as of the end of 2025 and $69 million in temporary notes or unfunded debt. The work proposed for the next two years would add about $40 million in debt if all are completed.
Gillian noted how the city’s rising ratables helped fund the myriad capital projects.
The proposed budget, like others before it, is being offset by another increase in real estate values. The total assessed valuation on the island has risen to $13.13 billion from $12.95 billion, a jump of more than $175 million year to year, following a trend of roughly $100 million increases annually.
The city’s regularly increasing ratable base has been a bulwark against higher tax increases.
The new budget calls for using $5.5 million from the surplus, leaving about $4.9 million in case of unexpected expenditures that may arise. That is the exact same as what the city used for this year’s budget.
The city’s tax rate has increased steadily over the past three years, rising 17 percent combined (but not compounded) over the three prior years. With the 2.41 percent proposed for the coming budget year, that would make about a 20 percent increase over four years.
The amount to be raised by taxes in this budget is $76.9 million, which is $2.2 million under the 2 percent levy cap imposed by the state.
Gillian has repeatedly pointed out that Ocean City’s tax rate remains low.
Some details from
proposed budget:
— The city is expecting a $400,000 drop in parking meter revenue, to $3.5 million. The city earned just over that amount in this fiscal year.
— Beach fees are expected to be flat at $5.9 million.
— User fees are projected to rise $150,000, to $1.15 million, for the Aquatic and Fitness Center.
— The city expects a small increase to $285,000 for Upper Township’s dispatching services.
— The mayor’s job will pay $42,500, up from $41,200. (When the city doubled the pay for the mayor and council and few years ago, it put in an automatic escalator.)
— Trash and recycling costs are jumping from $4.2 million to $4.7 million.
— Salaries and wages for police are $10.8 million, up from $10.3 million.
— Fire Department wages increase from $8.63 million to $8.79 million.
— Liability insurance jumps from about $900,000 to $1.4 million.
— Group health insurance climbs almost 9 percent to $9.4 million.
— Fuel oil costs are expected to rise from $215,000 to $300,000. (That projection may be before the potential impact of the ongoing war in Iran, which is substantially driving up prices currently.)
— Electricity is up almost 8 percent to $1.164 million.
— The cost of street lighting drops from $575,000 to $540,000.
— $5.61 million would go into the police and firefighters retirement fund, up from $5.38 million.
— $2.3 million would go into the public employees’ retirement system, up from $2.13 million.
— Lifeguard pension contributions are flat at $310,000.
— Social Security will cost $1.88 million, up from $1.75 million.
— $1 million is expected from the new occupancy tax.
— The Ocean City Free Public Library is funded by a dedicated municipal property tax but each year returns a major portion of that, beyond its operation cost, to the city. The library is returning $4.25 million to the city in the proposed budget, up from $3.8 million this year.
Donato will make a detailed budget presentation at the March 26 council meeting. Council will introduce it April 23 with a final vote May 21.
– By DAVID NAHAN/Sentinel staff