Monday, September 10, 2007
FIT Supports Budget Task Force Report
Fairness In Taxes Executive Committee is in full support of the findings by the Budget Task Force. The Budget Task Force is comprised of six (6) volunteers who are residents of Ocean City and three (3) of those members are also members of Fairness In Taxes Budget Committee.
March 14, 2007
To: Mayor Sal Perillo
From: The Budget Task Force
Subject: Report of Findings
The Mayor’s Budget Task Force (BTF) recognizes that there are many diverse factors affecting the Ocean City Municipal Budget, including a declining real estate market which is reducing ratable growth, issues associated with funding of the local library, limits on costs which can be passed on to the tourism sector, etc. We also recognize that the administration has taken positive strides in driving increased operating efficiencies through its’ efforts in the areas of wireless communications, computerized time clocks, “P” cards for procurement, elimination of 7 positions from the prior year’s budget, intent to address operating losses at the Aquatic & Fitness Center, as well as several other initiatives.
In our analysis of the city budget, one fact stands out. That is, if any long term city spending optimization is to occur, the single largest contributing factor of salaries / wages and benefits (including the legacy costs of long term pension and healthcare which carry on post-employee retirement) must be at the top of the list for action. This is evidenced by the fact that 67% of the 2007 amount to be raised by local taxation is allocated to salaries & wages (excluding benefits) and this percentage remains fairly constant throughout the 2007-2010 period. Thus, salaries / wages, and benefits remain the primary focus of our studies. We are, therefore, respectfully requesting that the administration take immediate action on the following items:
- Initiate an immediate hiring freeze
- Immediate staffing reduction and elimination from the budget of all currently vacant positions on a numerical (versus positional) basis.
- Immediate reduction to the Community Development Department, consistent on a pro rata percentage basis, with the projected reduction in code revenue. It would seem implausible that the excess personnel in this area can generate sufficient new revenue to cover their total salary & wages, benefits, and legacy costs
In the immediate future, (due to the amount of work required for bid packages, RFP’s, etc.) we would also request that the Administration immediately undertake an investigation on the feasibility of outsourcing the following activities:
- Grass Cutting / Landscaping
- Fleet Maintenance
- Traffic Maintenanc
Through our limited investigation and analysis of these departments, we have found that individual salaries are approximately $63,000 per year and total budget impact, including fringe benefits is approximately $85,000 per year. We identified these departments because they have, to varying degrees, already outsourced many of their tasks or responsibilities. The cumulative order of magnitude gross salary / wages & benefits (excluding legacy costs and supplies) for these areas is approximately $2 million. Thus, even a marginal percentage savings due to outsourcing would translate to significant tax dollar savings. As of this writing, the city has not identified cost of service expenses associated with facilities costs, building maintenance costs, equipment / equipment maintenance costs, administrative costs, supporting department costs, and costs of supplies. In addition, these departments are also influenced by weather, seasonal adjustments, contractual restrictions, and economies of scale. And it must be noted that legacy costs associated with health care and pensions compound the cost of services. We would request that the Administration’s cost / benefit analysis be fully completed by 8/1/07, and an interim discussion on the direction of this study be conducted with the BTF in the early June ’07 time frame.
Additionally it is our opinion that further budgetary inroads can be made via the following items (and would request that the Administration give due consideration to each of them):
- A consolidation of the Community Services, Public Works, and Planning & Engineering departments which should drive staffing reductions and allow for full utilization of the new Public Works Building.
- Sale of the city owned 46th Street lots
- Closure of the 46th Street Post Office
- Reduction in the number of city owned vehicles and the implementation of IRS rate mileage reimbursement for business driven use of personal vehicles
- Elimination of one fire platoon (Reference the September 2000 state audit entitled “Local Government Budget Review of Ocean City” cited below).
- Examination of city revenue centers (Aquatic & Fitness Center, Airport, Boat Ramp, Golf Course, Transportation Center) with action plans to bring them collectively to at least a “break even” operation. Balance sheet figures (most of which do not actually include all expenses associated with these operations and, therefore, understate the actual losses) received from the city on these operations indicate that they are currently operating at a significant loss.
- Establishment of “Cost Center” accounting for all revenue producing enterprises including those mentioned in the previous bullet, as well as city parking, beach fee collection, etc
- We would also recommend that the Administration re-visit the “Local Government Budget Review of Ocean City” (September 2000) completed by the State of New Jersey and which provides many recommendations for budget optimization, including specific recommendations for the police and fire / EMT departments.
As we have previously discussed, with your permission, we would like to remain as an active task force so that we may take a more detailed look at the above items as well as attempt to further examine and perhaps develop ideas on improving operating efficiencies, revenue streams, etc. We very much appreciate and thank you for your inclusion of this group of private citizens in the budget process.
The Budget Task Force