Ocean City Holds the Line on Spending in New Budget

In an era when Gov. Chris Christie's new mandatory 2 percent cap on property tax increases is seen as the benchmark for responsible government spending, Ocean City is delivering a proposed budget that calls for a decrease in the local tax levy.

"We're so far under the cap, it's not even worth talking about here in Ocean City," Finance Director Frank Donato told City Council at a budget workshop meeting on Thursday at City Hall.

The workshop was the second of two on the proposed budget for fiscal 2012 and addressed spending and appropriations.

Because the value of Ocean City's property ratables fell so much in 2011, not everybody in Ocean City will share the benefits of the tax levy decrease equally (see story), and City Council spent part of Thursday's workshop discussing what it would take to deliver tax cuts to everybody.

Donato said council would have to cut $1.8 million for the city to deliver a flat tax rate.

Councilman Keith Hartzell asked that council address that scenario head on, and he had the mayor's administration confirm the only realistic way to achieve that kind of cut: layoffs or furloughs.

Hartzell said that because only a small portion of layoff savings can be realized in a fiscal year, the number of job cuts necessary to make up $1.8 million would have to be substantial — he estimated as many as 70 or 80 layoffs could be necessary.

"Layoffs are very highly regulated," Business Administrator Mike Dattilo said. "It's not an uncomplicated or easy process."

Dattilo also noted that many of Ocean City's employees are tied, directly or indirectly, to revenue-generating operations.

While the budget process is ongoing, no member of council appeared to embrace the idea of massive layoffs or their potential impact.

Proposed spending for most departments — including administration, community services, police, fire and public works — is decreased.

Some areas where spending increases are proposed include:

• Health insurance: Up $497,000 as part of a state health benefits program.
• Debt service and capital: Up $303,996 based on new capital improvement plans.
• Legal Department: Up $179,800 based in part on lawsuit settlements and the cost of a labor attorney to negotiate contracts with city employees.
• Tax assessements: Up $153,150 to help facilitate more reassessments in the fall.

Ocean City's overall budget is for $69,191,856 in 2012, up by just 0.35 percent from 2011's $68,950,382.

Click on the attached PDF to see more detail on the proposed budget.