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Ocean City

City Council oks plan to eliminate one-cent tax hike

(May 2, 2014) City council approved a plan this week to eliminate next year’s proposed one-cent tax hike by stretching revenue estimates, delaying some new initiatives, and most importantly cutting in half the anticipated pay increase for non-union employees.

The city will save $206,274 in pay and associated social security by pushing back the 2.89 percent non-union payroll increase from the beginning of the fiscal year – July 1 – to Jan. 1, thus giving non-union employees their pay raise for half the 2014-2015 fiscal year instead of the whole.

The city’s chapter of the International Association of Fire Fighters will be receiving an across-the-board increase at the beginning of the fiscal year, but the Fraternal Order of Police will get theirs halfway through, as the general employees now will.

“I think it’s fair to give the general employees a raise at the same time as the police department,” said Councilman Joe Mitrecic.

However, it is important to note that – although not across-the-board – the majority of FOP membership will, in fact, be receiving a raise at the start of the fiscal year. The union’s contract calls for the pay step lost due to recession cuts in 2011 to be restored at the beginning of the coming fiscal year for any employee who was eligible at the time.

A number of savings will also come from reconciling long-term changes made after the 2014-2015 budget draft was started. These include the refunding of 2004 bonds at a lower rate and funds from OCDC for the mortgage on recently-purchased downtown properties.

Savings realized recently in the current 2013-3014 budget can also be used to pre-pay for items that otherwise would go into the 2014-2015.

“I believe I can find almost $105,000 in the current budget,” said budget manager Jennie Knapp.

More budget headroom was also realized by boosting the estimate for building permit fees income by $50,000, thus boosting the town’s revenues on paper, but reducing the margin of error for any shortfalls throughout the upcoming year.

“Construction permits have been up,” Mitrecic noted. “As somebody who deals with that office, I think we could probably receive another $25,000 on top of that easily.”

City Manager David Recor said he would be pursuing a review of the permit fee schedule, increasing rates so that fee income comes closer to covering administrative costs.

“There may be more money there if the consensus is to move ahead with a review of the department fee schedule,” Recor said.

The vehicle trust fund will also be reduced $90,000, putting off the purchase of a new street broom.

“We would’ve had to get through the current season with the old street broom anyway, so we can put the purchase on hold and try to find the money for next summer,” Knapp said.

Another $85,000 was knocked off the budget by using the savings previously allocated for street paving on operating expenses.

Street paving is allocated at $1.3 million, short of the $2 million annual goal the city needs to keep pace with its aging roadways. The city typically dedicates savings in other areas throughout the year back to the fund, which is currently at $1.9 million for this year.

Further reductions were made by funding two new staff positions for only half the year. A new training coordinator for the Human Resources Department will be hired halfway through the fiscal year, instead of at the beginning. The city’s part-time Special Events Coordinator was also scheduled to be made full-time, but this will happen in January instead of July as well.

The only budget increase discussed this week was a $13,000 expenditure to upgrade the city’s internal network backup software, a stop-gap measure requested by City Engineer Terry McGean to secure the city’s data until funding can be found for more costly upgrades.

All combined, the budget changes will result in the $851,795 in reductions necessary to drop the town’s tax rate to 47.04 cents per $100 of assessed value, instead of the proposed 48.04 cents.

The lower value is the so-called “constant yield” rate calculated by the state assessor’s office to bring in the same dollar value of taxes as last year, given fluctuations in assessed property values. However, the city had proposed earlier this year to raise that rate by one cent due to budget woes.

Although they supported the reductions, council members Brent Ashley and Margaret Pillas voted against moving the budget forward due to this year’s financial restrictions being the result of union pay raises, which they voted against.

“I’m not in opposition to the changes made to get back to constant yield, but I’m not moving this forward out of my concern over the union contracts,” Pillas said.

Combined raises for the FOP and IAFF this fiscal year come to $244,307. The city is also anticipating a $335,423 increase in pension and post-retirement medical contributions for union and non-union employees.

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