With so many variables, it’s tough to know how year will end, and how future looks

By Greg Ellison

(Dec. 24, 2020) Handicapping potential assessment increases in the Ocean Pines Association’s budget for next year would be challenging as it is, but the absence of covid-19 relief funds makes it worse.

General Manager John Viola shared projected forecasts to close the current fiscal year, while also reviewing work on the pending fiscal 2021-22 budget during the Ocean Pines Association Board meeting on Saturday.

“There’s a lot going on this year,” he said.

Viola said although making fiscal 20-21 projections has been difficult because of the pandemic, a closing forecast was prepared in response to a board request.

“During the pandemic it wasn’t easy without a playbook,” he said.

The ending fiscal year forecast included budget projections with and without pandemic relief funds.

Viola said after factoring out more than $1.4 million in federal Payroll Protection Program funding awarded to Ocean Pines, the current budget is forecast to lose roughly $900,000.

Viola said in addition to $1.143 million in PPP funds that Ocean Pines received directly, food and beverage contractor the Matt Ortt Companies was awarded $275,000, while the Affordable Care Act also accounted for $125,000 of budget favorability.

Director Frank Daly said an assessment increase of roughly $108 would be required the following year to recoup a $900,000 operating loss.

Viola said, by contrast, the forecast based on actualities is estimated closing favorable to budget by $650,000.

That figure represents about half the current $1.2 million net operating budget favorability recorded through October.

“There’s a lot of decisions, variables, options and challenges that we need to address this year,” he said.

Looking at the next fiscal budget, Viola said, besides a wealth of unknowns from the continuing pandemic, other rising costs include employee salaries and benefits.

“There’s no playbook and there are a lot of unknowns but for this budget we need to quantify everything,” he said. “There will have to be decisions made on all levels but there are options.”

Viola said fiscal 21-22 proposed numbers were distributed this week in advance of a multi-day departmental presentation before the Budget and Finance Committee scheduled from Jan. 6-8.

“The budget binders were completed yesterday for Budget and Finance and board,” he said.

Viola said the preliminary proposed budget was prepared after receiving guidance from the Budget and Finance Committee starting in September and then more recent information from department heads.

While pending budget allocations are still in the discussion phases, Viola said numerous items that could require assessment increases.

“We still have two to three months to see where we’re coming in,” he said.

The top initiative for 2021 is the soon-to-launch Bainbridge drainage project, which includes current budget allocations of $300,000 in matching funds for a state grant, plus more than $350,000 for Ocean Pines Public Works to complete comparable storm water pipe upgrades.

“We still needed to fund the pipes we said we’re going to do separate from Bainbridge,” he said. “We allocated from the public works budget for that and we’re good for this year, but now in 21-22 we don’t have any money in drainage.”

With prior drainage reserves soon to dry up, replenishing the funding during the next fiscal cycle could involve raising assessments.

“That alone would be an increase to budget of $44,” he said.

Viola said costs for employee salaries and medical benefits, as well as the association’s liability insurance premiums are certain to rise next year, which could require boosting assessment fees another $50.

“That’s a $94 possible increase to last year’s budget,” he said.

Subpar revenues from Ocean Pines pool facilities and parking charges at the Beach Club in Ocean City, which should trend upward at some point during 2021, also threaten to affect assessments.

“If it is true that people won’t come back as quick, that’s $32,” he said.

Viola said the final call on assessment increases falls to the board of directors, while noting fiscal 21-22 budget proposals are far from finalized.

“It’s still open for discussion over the next couple of weeks,” he said. “If you tell me to give you a budget with zero assessment increases, I can do it.”