(Feb. 8, 2018) Near the end of budget discussions Tuesday in Ocean Pines, Director Ted Moroney said deficit projections for the current fiscal year had ballooned to $1.5 to $1.8 million.
With a $370,000 shortfall during the previous fiscal year, Moroney said the two-year operational deficit is now close to $2.2 million.
“Despite what people say about just forgetting it, that just doesn’t happen,” he said. “‘Shouldn’t have to pay it because the board did it’, that just doesn’t happen. There’s only one group that pays, and that’s the 8,452 owners here.
“This is a key discussion — how are we going to address that, going forward?” Moroney asked.
He said the worst-case scenario had been about a $1.9 million loss over two years. Assuming a $30 increase in assessments this year, as is currently projected, “you’re talking like seven-and-a-half years to pay it back,” Moroney said.
“This is a serious thing and I think we’ve gotta identify what we’re going to do and how we’re going to do it, going forward,” he said.
Association President Doug Parks said cost-cutting measures for the remainder of the current fiscal year had been already discussed.
“I think it’s time to … put it into the tangible action part of it, because there are a couple of things that we can control that would not negatively affect the operation,” he said. “Clearly, that has to be done.”
Parks said the previous estimated loss for the year was about $1.2 million.
“We can cry over spilled milk, [but] today is today — what can we do today?” Parks said. “I’m as guilty as the next person for not taking more of an active approach in this … that number really scares me now.”
Director Slobodan Trendic wondered why the larger operational deficit was coming out at the end of two days of budget work sessions.
“If I knew yesterday morning that we are now looking at over $2 million in a possible deficit as opposed to what we were originally thinking, deficit reduction plan should have been the first thing on the agenda yesterday morning,” he said. “A lot of the talk we did today and yesterday — the dynamics of it would have changed substantially, given the fact of the numbers we are now told.”
Trendic said the 3-percent salary increase in the recommended budget should be one of the first items cut.
“You’re talking about a 3-percent salary raise and you’re looking at a $2 million deficit? No,” he said. “This is a reality check for all of us, because the membership, when they hear this number, I know there’s going to be some screaming.”
One of the problems, according to Moroney, is “a tendency for boards in Ocean Pines to approve a budget and then some great idea comes along and we go ahead to pass to spend money without ever addressing where the money is coming from.”
“You need to be locked into [a budget], because you’ve already set your revenue with your assessment, so you can’t come back later on and say I want to add a pickleball court here at $45,000,” he said. “Big picture looking, going forward, has to be budget discipline. And that’s a problem.
“Whatever budget we come up with … we’ve got to stick to that budget,” Moroney added. “Whatever we vote on, that’s it – and that’s what we’ve got to live with.”
Asked if there were any additional comments, Trendic deadpanned, “I need a drink tonight.”
“Maybe two,” Moroney said.
A budget hearing for membership is scheduled for Saturday at 10 a.m. in the Tern Grille.