Council Takes Over Budget That Cuts Spending But Raises Tax Rate

City Council voted unanimously Thursday to "introduce" a 2012 municipal budget of about $68 million.

The vote is a step in the process of completing a budget for the next fiscal year. In February, Mayor Jay Gillian's administration delivered the proposed budget. City Council now has its chance to make revisions as it works toward adopting a final budget at its April 26 meeting.

The total proposed budget stands at $67,999,825, which represents a 1.38 percent decrease from the prior year's budget of $68,950,382.

The amount of money the city proposes to collect from taxpayers also decreases. The proposed tax levy decreases by $169,794 from the prior year to $43,203,743.

Tax levy and tax rate detail is as follows:

Because there will be less property value to tax next year, the local tax rate will go up.

The total assessed value of property in Ocean City fell by more than $681 million in 2011. The decrease in the ratable base is the result of 622 successful tax appeals in 2011 and about 3,000 reassessments completed by the city.

The bottom line for taxpayers: an increase of 1.695 cents (or 5.015 percent) on the tax rate. That means taxpayers will pay an extra $16.95 in taxes for every $100,000 worth of property. The owner of a $500,000 home will see an increase of $84.75 in municipal taxes (not including school or county taxes).

The budget introduced by City Council on Thursday represents a slightly larger proposed tax levy (by about $43,000 and based primarily on an employee who changed his mind about retirement and on a $20,000 budget for the Ethics Board) and a slightly smaller overall budget (based on grants and changes in capital spending) than .

For his eighth and final budget, Councilman Roy Wagner (who will not seek re-election in May) said he would remain true to tradition in pushing for a flat tax rate. He suggested using the city's surplus fund balance, in part, to find the more than $2 million it would take to keep the tax rate unchanged.

Councilman Keith Hartzell suggested that the $20,000 budgeted for the Ethics Board may not be sufficient—based on new pending cases and the likelihood that any finding of an ethical violation will be appealed. He also said he'll continue to push for his plan for savings on Fire Department staffing and overtime.

Because the proposed budget includes capital spending on the historic U.S. Life Saving Station at Fourth Street and Atlantic Avenue, Councilman Scott Ping said he cannot support it until the city gets a signed contract from the nonprofit group that has promised to repay the city for the costs of renovation.

Hartzell and Ping praised Gillian's administration for its transparent and fiscally responsible approach to the budget—a change from previous administrations, they said.

"This is a tight budget, and I do appreciate the process," Hartzell said.