Ocean City Today

Resort’s finances still strong by end of fiscal year 2017

By Katie Tabeling | Nov 09, 2017

(Nov. 10, 2017) Ocean City’s day-to-day operations came into some money as fiscal year 2017 ended, as the resort increased its net position by $9.42 million.

That boost was a result from city departments bringing in $10.3 million, which was a $2.6 million gain from last year. Minor business losses brought the total amount down.

Water, wastewater and golf course funds either broke even or generated revenue. The remaining accounts – transportation, convention center and the airport — needed help from the general fund, but were able to recoup 45.5 percent of their expenses from fees.

Public safety remains the city’s most expensive endeavor at $33 million.

The resort’s financial standing was also strengthened by its tight budget. Department heads overestimated their expenses at $81 million and underestimated revenues in at $83 million for July 2016 to July 2017.

Instead, Financial Administrator Martha Bennett said during Monday night’s City Council meeting actual revenues were $85 million with expenses down at $78 million.

“That resulted a change in the fund balance of $3.8 million instead of the deficit of $304,998 we were expecting for the year,” she said.

The fund balance is the difference between assets and liabilities, similar to a savings account. Ocean City’s policy is to keep 15 percent of its money unassigned in case of an emergency. At the end of fiscal year 2017, that level was 25.7 percent or $20.3 million.

Ocean City’s strong reserves also resulted in a bond rating upgrade last year. Standards & Poor upgraded the resort from AA to AA+ and Fitch Ratings increased the rate from AA- to AA.

The city’s pension plans did well this year, as investments saw a 9.5 percent rate of return. The general employees plan was funded at 85.11 percent, and the public safety employees were funded at 79.8 percent.

Ocean City’s pensions have $23 million in unfunded liability, and the town is amortizing that amount over a 10-year period.

The Other Post Employment Benefit Trust Fund, which is part of city employees’ retirement packages is funded at 51.4 percent. The resort has $27.8 million in unfunded liability left to pay off in 22 years.

Overall, Bennett said, the city ended at a net position of $166.3 million. Of that amount, $136.7 million is invested in capital assets such as streets, buildings and equipment. Roughly $26.7 million of that amount is unrestricted.

After the report, the City Council thanked Bennett, as this is her final annual financial report presentation before her retirement.

“Thank you for the job you’ve done,” Councilman Tony DeLuca. “It’s very strong work.”

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