Tax Burden Shifts as Ocean City Catches Up With Falling Real Estate Values
The proposed tax rate increases by more than 8 percent as the ratable base decreases by $848 million.
The majority of the owners of Ocean City's approximately 19,000 taxable properties will see a municipal tax increase of more than 8 percent this year under a proposed budget.
That's not because the city is spending that much more — the city will ask only 1 percent more of local taxpayers under the draft budget presented at a City Council workshop on Wednesday (Feb. 20) at the Ocean City Free Public Library.
It's because many owners will see tax decreases, likely among the ranks of the following:
- The more than 800 owners who filed successful tax appeals in 2012, reducing the collective value of their properties by $108 million.
- The thousands of owners whose properties were reassessed in a pro-active project by the city to get assessed values in line with market values. The 2013 "compliance plan" reduced combined Ocean City property values by $782 million.
- The owners whose homes were reassessed base on Superstorm Sandy damage (at a collective $15.5 million).
The total combined value of Ocean City's taxable property (ratable base) fell by $847,631,052 in one year and now stands at about $11.3 billion. With less property value to tax, the proposed tax rate went up by 2.96 cents, an 8.315 percent increase.
That means the owner of a $500,000 home (not quite the median in Ocean City) will pay an extra $148 in municipal taxes next year under the proposed budget, if the owner's property is assessed at the same value it was last year. Each penny increase on the tax rate represents $10 more in taxes per $100,000 of property.
"It is the responsible thing to do," Business Administrator Mike Dattilo said of Ocean City's compliance plan to get assessed values to reflect market values more closely. "And it's fairer to the property owners."
The compliance plan started last year in areas where assessed values were farthest from market values — including high-end properties on the beach and bay, and also some of the low-end "condotels" (motels converted as condos), Finance Director Frank Donato said at the time. It continued this year with thousands of other properties with assessed values out of line with the market.
Dattilo said last week that with the majority of the compliance plan complete, the ratable base will begin to stabilize for future budgets.
The tax rate will be the end result of a budget process that continues into the spring, when City Council will approve a final version.
Mayor Jay Gillian's administration delivered a draft budget on Feb. 14 that asks local taxpayers for just 1 percent more in 2013 than in 2012.
The proposed budget of $70,957,959 represents a $2.2 million (or 3.27 percent) increase over last year's $68.7 million budget. But because projected local revenue (largely from parking fees, Sandy reimbursements and a capital fund) increases by $2 million, the draft budget increases the tax levy ($43.7 million for 2013) by just $440,390.
The parking fee increases are based on a proposed rate increase for an expanded zone of credit-card meters (where parking would be 25 cents for 10 minutes).