Ocean City Today

Tourism revenue stagnant, expenses increase

By Katie Tabeling | Oct 19, 2017

(Oct. 20, 2017) As Ocean City officials look for ways to increase revenue to pay for capital projects, the resort’s revenues from tourism-driven sources this summer differed little from last year.

The City Council’s financial planning discussion has been taking place throughout the year, culminating with the presentation of $105 million in five-year capital projects plan last week.

At one point, Budget Manager Jennie Knapp cautioned the council that summer revenue from Boardwalk tram, bus and parking fees and room tax was not as strong.

“We had three very good summers in the past, but I don’t believe this past summer was as good to the Town of Ocean City,” she said during Sept. 12 work session. “I’m already seeing it, and we’re going to have to react to that.”

Although it is too early to determine the full impact of these fees for fiscal year 2018, the Boardwalk trams garnered $816,521 in fares from July to September. The buses totaled $1.47 million in revenue in that same time. Both services charge $3, although the bus allows all-day rides.

Revenue from the trams in that time period was down $67,000, as compared to the same period last year.

“As the tram operates on the Boardwalk, revenue is dependent to some degree on the weather,” Knapp said last week. “We lost more nights than average to rain this past summer.”

Parking fees remained static this summer, resulting in $3.08 million revenue between July and September. The council made several alterations to paid parking in the past two years, such as extending the meters’ service dates to April 1 through Oct. 31.

Rates have also increased from $1.50 to $2 an hour for the meters from April 1 to the Wednesday before Memorial Day and Labor Day to Oct. 31. Parking fees from Memorial Day to Labor Day were raised to $3.

The council also altered the inlet lot’s paid parking time increments from 15 minutes to 20 minutes, resulting in an hour charge of $3. The free period was also reduced.

Room tax, meanwhile, was $4.2 million in July of fiscal year 2017. That month this year generated $4.16 in revenue.

Parking revenue and room tax contribute to the general fund, budgeted at $84.3 million this fiscal year, and offsets expenses for all departments. Bus and Boardwalk trams help pay for the transportation fund, which is not self-sustaining and requires some funding from the general fund.

Two percent of the gross room revenue is used for “destination advertising,” while the rest is earmarked for the general fund and offsets expenses for all departments.

Even then, Knapp said room tax is the “second largest revenue source in the general fund,” next to property tax. Property tax revenue provides roughly 48 percent of the general fund.

Councilman Wayne Hartman last week pushed increasing costs to visitors to help pay for various projects outlined in the financial plan, instead of increasing property taxes.

According to the adopted fiscal year 2017 budget, property taxes provided $40.4 million to the general fund, compared to the $24.2 million collected from parking fees, room tax and tram and bus fares.

This story has been updated to correctly state that the inlet parking fare is $3 an hour, not $5.

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