By Donald WittkowskiMayor Jay Gillian proposed a $79.7 million operating budget Thursday night that includes spending for an unprecedented capital program to upgrade Ocean City’s infrastructure, but comes with a price – a nearly 3 cent increase in the local property tax rate.“For the extraordinary amount of work that is getting done, I believe the budget is responsible,” Gillian said while unveiling the 2017 spending plan during his annual “State of the City” address before City Council. “I never like to see taxes go up by even a cent. But this is work that has to be done.”The mayor and his aides stressed that the budget reflects a citywide effort to improve the roads, build new drainage systems, dredge the shallow lagoons and continue with a multiyear refurbishment of the Boardwalk.“This level of capital is unprecedented,” said Frank Donato, the city’s chief financial officer.In the past year, Gillian has held a series of town hall meetings to outline parts of his construction program. In the process, he has repeatedly emphasized the need to rebuild the city’s aging infrastructure. He said Ocean City’s residents are anxious to see that happen.“Every day, the city receives letters and emails and calls. And we hear it every time City Council meets. People want one thing: For us to fix the city’s streets, waterways and facilities. We still have a lot of work ahead, but I’m proud of what we’ve accomplished,” he said.The proposed budget will be scrutinized by Council before a vote is taken by the governing body. Council is expected to introduce the budget on March 23, followed by a public hearing and final vote tentatively scheduled for April 27.Council will be free to make changes in the budget, but the early reaction seemed favorable. Councilman Keith Hartzell, who made the most extensive comments on the budget Thursday, praised the mayor for focusing on the city’s infrastructure needs. Echoing Gillian’s words, Hartzell called it “a responsible budget, on first blush.”“When we look in the rearview mirror 10 years from now, I think people are going to be very happy that we did this,” Hartzell said.City Council will scrutinize the mayor’s spending plan before voting on it.The spending plan represents an increase of $4 million, or 5.2 percent, compared to the city’s $75.7 million operating budget in 2016. The 2016 budget increased the local tax rate by a penny.Under the 2017 budget, the local property tax rate will increase by 2.85 cents. If the budget is approved by Council without any changes, it would mean the owner of the typical home assessed at $500,000 would pay an extra $143 in municipal taxes in 2017. That amount does not include school or county taxes.Gillian noted that debt service and down payments on new projects account for about half of the $4 million increase in budget spending this year. A $1.1 million increase in the city’s health insurance costs this year is another major reason for the higher budget compared to 2016, he said.In a related move Thursday, Council introduced a $12.2 million funding package, including nearly $11.6 million in city bonds and notes, to finance some of the construction projects in 2017.They include the Boardwalk’s reconstruction between 10th and 12th streets, dredging work, repairs to city buildings and a series of upgrades to playgrounds and recreation centers. The Boardwalk’s refurbishment between 10th and 12th streets will be the last phase of a multiyear rehabilitation project stretching from Fifth to 12th streets and costing a total of about $10 million.Continuing what he started in 2016, Gillian is once again placing an emphasis on dredging projects to clear out the sediment-choked lagoons and channels along the back bays. After setting aside $10 million for dredging projects in 2016, he has proposed $7.5 million for similar work this year as part of his five-year capital plan.Roadway, drainage and pumping projects will be another centerpiece of the capital plan in 2017. Work is scheduled to begin this spring on a $6.6 million flood-control project – the largest of its kind in city history – encompassing the neighborhoods between 26th and 34th streets. That area has been particularly vulnerable to storm flooding over the years. Mayor Jay Gillian is promising an ambitious program to upgrade roads, drainage systems and other parts of the city’s infrastructure.