Ocean City Today
https://oceancitytoday.villagesoup.com/p/1728730

Fiscal ‘19 revenue reviewed prior to budget talks in OC

By Greg Ellison | Mar 01, 2018
Photo by: Greg Ellison Budget Manager Jennie Knapp, who presented general fund revenue projections for fiscal year 2019 during the City Council work session on Tuesday, is estimating revenue increases of roughly $1.125 million for the upcoming fiscal year, with budget set for introduction on April 10.

(March 2, 2018) Although final figures are still forthcoming, Ocean City is projecting a roughly $1.125 million revenue increase during fiscal year 2019. Only about a third of that, however, will come from property taxes.

Budget Manager Jennie Knapp, who presented general fund revenue projections during the City Council work session on Tuesday, said fiscal year 2019 is year one of the three-year state assessment cycle for real property.

“Normally, we do this as part of our overall budget presentation, [but] we wanted to come in today about a month earlier to give you an overview,” she said. “I anticipate some of these numbers will change.”

For FY19, all real property was re-assessed, with the exception of commercial sites south of 25th Street, which will be assessed next year. Assessment increases would be phased in by one-third each year

Knapp said, however, that the new assessments showed an overall decrease of about .25 percent.

“Essentially, they were flat,” she said.

Even so, Knapp said property taxes are expected to generate approximately $40,736,828 based on a constant yield tax rate of 46.56 cents per $100 of assessed value.

Knapp proposed rounding that number to 46.67 cents for an estimated total of $40,746,369. The marginally higher rate would boost property taxes for a home valued at $300,000 by $3, from $1,397 to $1,400.

“I’m suggesting we stay with the constant yield tax rate because that brings in the same amount of revenue as last year,” she said. “That’s what we have done for the past eight to 10 years.”

Knapp also said new construction is expected to bring in roughly $217,042 in additional revenue.

Property tax calculations involve two components; a state assessment done every three years based on fair market value and a tax rate set by the City Council. The formula used to calculate tax bills divides the assessed property value by 100 and multiplies that by the tax rate.

Resident property owners would be exempted from FY19 assessment increases through the Homestead Property Tax Credit. In November 2014, the council cut the rate from three percent to zero for principal residences, which effectively delays assessment increases used to calculate tax bills.

In the current fiscal year, Knapp said approximately 48 percent of general fund balance was provided from real property taxes, with the majority coming from a combination of room taxes, charges for services and funding from other agencies.

Topping the list of estimated revenue increases for next year are property taxes, roughly expected to bring in an additional $386,000, and parking fines, which are anticipated to grow by more than $267,000.

Room tax is budgeted to increase .5 percent and generate more than $15.5 million, which represents a roughly $87,000 revenue increase over the current year.

“Part of that increase has to go to adverting,” she said. “The amount not dedicated to advertising is $48,860.”

Knapp also noted that financial support from Worcester County could also increase.

“It is quite common for the town to receive additional grant funding of $500,000 or more in a single fiscal year,” she said.

The fiscal 19 budget will be introduced at the City Council work session on April 10, and will be followed by two weeks of budget meetings.

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