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APRIL 8, 2022
Ocean City Today
Buas suggests adding separate disaster fund Continued from Page 1 about $10.1 million. A little more than $13 million is also set aside through the 15 percent reserve policy, and $1.5 million is dedicated specifically to capital improvement projects. If the reserve percentage goes up to 20, that fund would have about $17.3 million. However if it stays at 15, there is about $4.3 million that could be used for other expenses, or go back into the unassigned balance. Councilman John Gehrig previously asked whether that amount could be used to pay down debt or fund capital expenses, Then at last week’s meeting, Councilman Peter Buas suggested an entirely different alternative. Under his proposed plan, staff members would keep the reserves at 15 percent, and set aside a fixed amount to be used specifically for hurricanes and disasters. Based upon estimates from City Manager Terry McGean that set disaster relief costs at about $1.5 million on the low end, Buas suggested the new fund could start with $3 million. Staff members would then reevaluate it as often as necessary to determine how much money should be there to ensure adequate disaster coverage. “It solves both problems,” Buas
FILE PHOTO COURTESY CHAD BARRICK
Roof damage to a condo building on Bayshore drive from Tropical Storm Isaias in August 2020 totaled about $200,000.
said during the meeting of the proposal. “It solves the problem of, we need to keep a reserve fund in case something bad happens, … it protects the bond ratings because we have to keep a 15 percent reserve, and it shows we’re planning for disaster and we don’t continue to grow something that we don’t reinvest in the community.”
He added that he is not in favor of raising the reserve fund to 20 percent because he sees it growing too fast. With the alternative, money is still in the coffers for hurricane relief, which would come out of the reserves anyway, but it’s at a fixed rate that is easier to handle and control. Buas also said that it makes him “uncomfortable” to have $10 million
just sitting in the unassigned fund balance. In turn, he suggested having a plan for the money, such as using it for capital improvement expenses. “Just like personally we don’t keep something in our bank account, we reinvest it and pay down debt. It’s the same with the town,” he said. As Buas pitched his idea, Mayor Rick Meehan said it sounded like a good approach. Not everyone was on board, though. Gehrig questioned why a separate hurricane fund would need to be established, calling it at one point “a cute accounting thing,” as he said the reserves are already in place for those types of expenses. Buas explained that the separate fund would help staff members budget for various expenses. After the council members’ discussions, finance officials agreed to look into not only Buas’ suggestion but other alternatives for the allocation of the funds. Budget Director Jennie Knapp said staff is discussing everything and will be ready with assessments and alternative ideas when the matter comes back up for discussion. It should be noted as well that the 15 percent reserve allocation is a city policy, not a legal requirement, thus officials have control over how much goes in and out of the fund.
