Ocean City Hiring Freeze Clears Way for Budget Approval

Ocean City will implement an across-the-board hiring freeze on municipal employees following negotiations between Mayor Jay Gillian's administration and City Council on the newly adopted $112.5 million operating budget for 2025.

The hiring freeze resulted after Council pushed for ways to rein in city spending following Gillian's proposal to raise local property taxes to help fund the budget.

With Gillian willing to agree to a hiring freeze, Council gave the budget final approval Thursday night by a 5-1 vote. Second Ward Councilman Keith Hartzell cast the dissenting vote after expressing concerns that another tax increase would hurt the city's senior citizens during their retirement years.

"I've heard a lot of people say it's too much," Hartzell said.

In an interview after the Council meeting Gillian said he always intended to implement a hiring freeze this year to help control expenses, even before negotiating with Council.

"We were going to do it anyway," he said.

Gillian explained that the hiring freeze will cover all city departments, including the police and fire departments.

"You can't rule out different people. It's everybody," he said.

In the meantime, the city department heads will continue to look for ways to cut spending, the mayor pointed out.

"The departments all know to keep looking for stuff," he said.

    City Council gives the $112.5 million budget final approval by a 5-1 vote.
  

The budget includes a 3.7-cent tax hike that would add an extra $242 annually on the local tax bill for the average Ocean City home assessed at $645,000, said Frank Donato, the city's chief financial officer.

Altogether, the annual local tax bill for a $645,000 home would be $3,687. School and county taxes are separate from the local tax bill.

This is the third straight year that the city has increased the local tax rate. Altogether, the tax increases come to 17 percent for the three-year period, including what amounts to a 7 percent hike for 2025.

Dave Breeden, president of Fairness In Taxes, a community watchdog group, said the latest round of taxes will cause "sticker shock" for local residents. Breeden was one of the budget critics who had been calling for a hiring freeze to help control spending.

"Ocean City does not have a revenue problem. It has more revenue and ratables than it's ever had in its history. Ocean City has a spending problem, and while some increases in spending can be linked to inflationary pressures, the major driving force behind our increasing budget is people and employees and the city's increasing payroll," Breeden said.

During a budget presentation in March, Donato explained to Council that higher costs for municipal salaries, pensions, healthcare, trash collection, utilities and debt service are some of the main reasons why the 2025 spending plan has gone up.

Fourth Ward Councilman Dave Winslow, who conducted a thorough review of the budget, said that salaries and wages alone represent 36 percent of the $112.5 million spending plan, or nearly $40 million.

Winslow, a retired human resources executive in the corporate world, read a lengthy statement during Thursday's Council meeting outlining a series of steps he believes will help cut or control the city's spending.

    Councilman Dave Winslow reads from a list of recommendations he wants the city to implement to help control labor costs.
  

Winslow's recommendations include:

• Implementing a hiring and promotions freeze for municipal workers, except for critical seasonal positions, such as lifeguards and beach tax inspectors.
• Increasing the use of technology to modernize the city's labor management system, which keeps track of employee work hours and pay rates.
• Completing a department-by-department labor analysis to determine ideal municipal staffing levels for all times of the year.
• Taking a close look at the city's labor agreements to find ways to reduce expenses "while not hurting employees."
• Finding creative ways to better manage the city's "legacy wages" which are paid out to long-term employees to reward them for their years of service.
• Forming a Compensation-Compliance Committee, which would include a diverse group of city representatives, to review employment-related issues.
• Establishing what Winslow called "robust" training and development programs to help improve the overall performance of city employees.
• Having the mayor, the city's business administrator and the chief financial officer hold monthly meetings with the department heads and managers to review their monthly labor expenses, staffing levels and overtime costs.

"In closing, I believe that keeping the old adage, 'Is it nice or is it necessary?' front of mind and ingrained in the culture throughout the year, and by considering the options I have laid out today, will go a long way to seeing improved efficiencies and reduced expenses, something that all businesses should strive for," Winslow said.