OC Room Tax Figure Expected TO Break $10M
OCEAN CITY - Almost a quarter of the new year has already passed but when it comes to the yearly cycle based around the town's budget, it's a over halfway through the fiscal year.
At the Mayor and City Council meeting on Monday, Finance Administrator Martha Bennett gave a presentation to the council updating it on the town's finances.
Currently the town faces a projected deficit of $1.5 million but is expected to lower to it to approximately $500,000 by fiscal year's end, an amount that is less than what officials originally expected due to a combination of revenue the town has already received, Bennett said.
'The biggest revenue source is property taxes,' she added. 'Room tax is 7 percent above what it was last year and we anticipate for the first time this year to receive over $10 million in room tax receipts for the year.'
That kind of revenue is something Bennett said she believes is a good indicator of how well the fiscal year is going. She also said at this point in time, the city's revenues were at 86 percent of the budget and expenses 65 percent.
Before officials begin preparing for the next fiscal year, Bennett said the town must look at where the fund balance will be. Last year it ended with a balance of 12.4 percent, a good figure according to Bennett. However, since officials are expecting a deficit this year, the balance is predicted to be around 11 percent.
'We are trying very hard to stay at this goal, it helps us meet our cash flow needs when we transition from one fiscal year to the next,' she said. 'We have it for emergences as well as any unanticipated expenses you may appropriate during the year.'
On the downside, there were some concerns with the golf and airport funds, Bennett said. As of March 1, they each had deficits that required advances from the general fund to meet their cash flow.
'We do expect their balances to improve over the next several weeks, particularly the golf course fund as they have a lot of business in the spring,' she said.
The one thing no one enjoys hearing about is debt. According to Bennett, Ocean City currently owes $82 million in debt, 41 percent of which is due to water and wastewater projects and 24 percent of which included building improvements within the city such as City Hall and the Public Safety building.The average interest rate on the debt is holding at 4 percent and according to Bennett, half of the debt will be paid off by 2014, with the town being entirely debt free by 2026.