Ocean View proposes 2-cent tax-rate increase in balanced $6.3M FY26 budget; consultant warns trust fund could be depleted by 2027

Ocean View’s town manager presented a proposed FY26 operating budget that would raise the town’s real-estate tax rate by two cents and rely in part on one-time reserves while the council considers longer-term policy changes.

Carol, the town manager, told the council the proposed FY26 operating budget totals $6.3 million and the capital program totals $1.6 million and that staff recommends increasing the town’s tax rate from about 2.378 to 2.578 per $100 assessed value — a 2-cent increase. The proposed budget also includes a 3% cost-of-living increase for employees (with exceptions for some contractual positions), a $3,000 across-the-board pay adjustment for sworn officers, and a targeted $68,000 starting salary for new officers.

The budget document assumes limited one-time uses of unassigned fund balance: $69,500 is earmarked to cover two studies of the police department (a compensation study and a legal/risk analysis) that staff recommended be funded if the FY26 budget is approved. Carol said departments continue to pursue grants and reported the town was awarded $1.5 million in grant money for street repair and replacement work.

The town manager also reported that the town’s small water-distribution system (about 900 properties) is expected to be sold soon and that the Public Service Commission had approved the sale before the budget was finalized; staff and consultants discussed dedicating some sale proceeds to a tax-rate stabilization reserve.

A consultant from PFM presented the firm’s five-year forecast and recommendations. PFM said FY26 is expected to be balanced under the proposal but warned that, as transfer-tax receipts level off and capital spending continues, the town’s capital trust fund balance could be depleted by FY2027 without changes. "I think the trust fund balance is going to be depleted by FY 2027," PFM’s presenter said, and urged councilmembers to consider modest, incremental policy changes to avoid sharper adjustments later.

PFM’s recommended package included: codifying an unassigned fund balance policy; creating a tax-rate stabilization reserve that the town could “touch” to smooth large rate changes; adopting a modest real-estate tax indexing policy to keep revenues in line with expenditures; and pursuing a capital strategy that prioritizes investments that reduce long-term maintenance costs. PFM suggested seeding a stabilization reserve with proceeds from the planned water sale and discussed using $500,000 as an illustrative seed amount, with the remaining sale proceeds available for strategic investments in existing infrastructure.

Council members asked for further detail on fee revenues and consulting costs; staff agreed to provide a printout of revenue by fee/code and to follow up with line-item detail for one-time consulting services. Council members also discussed police overtime and clarified that a portion of overtime is reimbursable through grant programs such as the Office of Highway Safety.

PFM spoke at length about workforce strategy, urging the town to take a systematic look at total compensation and benefits (not just starting salary) and to use workload and turnaround-time metrics when making decisions about head count. On capital financing, PFM recommended considering targeted debt financing for very long-lived projects rather than funding every capital item with cash if doing so would deplete trust funds and make the town vulnerable to future revenue shocks.

There were no public comments. Council members directed staff to return with the requested fee-by-fee revenue detail and consulting-cost breakdowns, and the manager said the council is likely to consider formal budget approval at the next meeting.

The meeting concluded without a final budget vote; council members moved to adjourn.