Ocean City budget proposal totals $118.49 million; municipal tax rate up 1.38 cents

Frank, the city's budget presenter, told the City Council on March 26 that the mayor's proposed 2026 municipal budget totals $118,487,000 and is supported by a municipal tax levy of $76.8 million.

The proposal would set the local tax rate at 58.58 cents — a 1.38-cent increase from last year's rate — which Frank said translates to about an $89 increase for a homeowner with the average $650,000 assessed value used in the town's example. The draft budget is up roughly $4.99 million from 2025.

Why it matters: Frank said the increase stems from rising debt service (about $1.4 million), higher insurance costs (roughly $1 million, primarily health), pension costs (+$400,000) and salary increases (+$794,000). He emphasized that the town remains within state statutory caps but will introduce a cap-bank ordinance at introduction to secure banking for future years.

Revenue and key assumptions Frank walked the council through revenue estimates taken from the state's required budget document and a more detailed workbook. He recommended conservative assumptions for several categories:

- Parking: Recommended budgeting $3.5 million after an off year; staff reported about 20,000 fewer boardwalk-lot cars than the prior year. - Beach tags: Down from a prior high of $6.2 million to roughly $5.9 million in 2025. - Occupancy tax: A new 3% tax on transient rentals is projected using AirDNA data; Frank recommended a conservative $1.0 million assumption though he said AirDNA figures point toward about $1.3 million based on 2024–2025 volumes. - Other operating revenues: Fees and permits (music pier receipts, golf, recreation, permitting) were reviewed line-by-line in the workbook.

Fund balance and fiscal posture Frank reported a year-end general fund balance of $10.26 million and said the proposed budget uses about $5.5 million of that balance as revenue. He described the balance as a tool for cash flow, emergencies, and bond-rating stability, and explained the common replenishment mechanisms: conservative budgeting, collecting delinquent taxes, and roll-off of unspent prior-year appropriations.

Ratable base and tax-impact context The presenter said the town's ratable base is about $13 billion (he noted fair-market values are substantially higher), and explained how a penny on the tax rate equates to roughly $1.3 million in municipal revenue. That metric framed the council's choices about cuts versus revenue changes.

Expenses, staffing and benefits Frank outlined the principal pressure points: debt service, rising health insurance costs (municipal budgeted health-care near $10 million versus an estimated $16 million under state health benefits rates), pensions and contractually required cost-of-living adjustments. He reported total full-time headcount at 282 for 2026, down four positions through attrition and operational adjustments, and described the large seasonal hiring needs for police, lifeguards and public works ahead of summer.

Next steps and schedule Frank said the administration plans to introduce the budget at the council's second April meeting; state rules require a 28-day public display before adoption, with adoption targeted for the second meeting in May. Council members will have time to request detailed follow-ups from staff.

What the council heard from residents During public comment several residents raised questions related to the consent agenda (including a request to explain a professional-services contract tied to an environmental cleanup) and made service requests on benches, bike racks, and trash pickup timing; those items were addressed separately in public comment and will be routed to staff as appropriate.

The process now moves to formal introduction and public review in April, followed by adoption in May unless the council amends its timing.