Dewey Beach is heading toward ending its fiscal year nearly $300,000 in the red, and town officials say there is no easy fix to getting the budget back on track.
In March, Dewey Beach Town Council passes a balanced budget for fiscal year 2012-2013. Town Manager Marc Appelbaum and Finance Director Nancy McCloskey now estimate the town will end its fiscal year with a $297,000 gap in revenues.
Appelbaum said council must decide whether to create new revenue or make cuts. “But there are consequences to all these things,” he said.
At a Nov. 9 town council meeting, Commissioner Gary Mauler asked if there were inefficiencies in town hall that could be addressed. Appelbaum said he was in the process of improving productivity and cutting expenses, but most of the expenses in the budget are fixed, and much of the revenue is no longer coming in because the summer season is over. “There’s very little expensewise that can be cut,” he said. “Unless you want to do layoffs of people.”
On the expense side, Appelbaum said, the police payroll is already over its budget for the year by more than $30,000; the alderman payroll is so far over by $10,000.
Regular legal expenses, which do not include legal expenses related to lawsuits, are over budget by $70,000. “It is one of the most egregious areas that we’re over,” Appelbaum said.
Appelbaum said parking permits and meters were expected to bring in $100,000 more revenue than they did.
Parking-meter revenue was budgeted to bring in $169,000; in the past four years, meter revenue was only budgeted at about $100,000.
In April, the town hired Duncan Solutions to install a smart-meter parking system. Commissioner Anna Legates said the change was expected to be more profitable. She also said the new meters botched multiple credit card purchases over the summer. Parking meters generated $141,000 in actual revenue this year.
Revenue from parking-permit sales, which has been steadily increasing over the past four years, plummeted. Appelbaum said revenue from permits is $70,000 less than budgeted. He said the town received $40,000 less than budgeted from daily parking permits. Because more meters were installed, Appelbaum said, it could have caused fewer people to buy permits.
David King, who led the budget and finance committee in creating this year’s budget, said the drop in permit sales could also be attributed to the rise in gas prices over the summer. King said in past years, when gas prices go up, parking fines and revenue from meters and permits all tend to go down.
The town was also expected to collect $84,000 in delinquent parking fines; it has so far collected only $54,000. King said Duncan Solutions had promised to collect more than 60 percent of the town’s $140,000 in outstanding parking tickets for the year, but so far have not.
Commercial business license permits have so far brought in $30,000 less than budgeted. Appelbaum said an agreement to increase the amount businesses pay per person in their license fees was incorporated into the budget, but it never took effect.
“The $9 rate was put into last year’s budget and formulated into this year’s budget,” Appelbaum said. By code, the town can charge only $6 per person to food and beverage service establishments.
Other items in the red include nondeliquent parking fines, investments and lifeguard donations.
Council briefly tossed around ideas for creating new revenue, including an event fee for weddings and red-light cameras. Commissioner Courtney Riordan said raising the occupancy rate for businesses to $15 per person instead of $6 would bring revenue into this year’s budget. “It’s highly controversial to do that, but on the other hand, we’re seriously strapped,” he said.
Appelbaum said the town should establish a system of compliance, so people who owe money for parking fines or accommodations taxes would be forced to pay. “There no question, I think we’re not getting what we ought to get,” Appelbaum said. “What do we do about it?” Appelbaum asked. “How do we encourage or demand…compliance?”
In the summer of 2011, the town hired a part-time code enforcement officer for $5,000. Commissioner Joy Howell said the officer brought in $60,000 in fees and fines. King said the current budget includes about $5,000 for a code enforcement officer if Appelbaum decides to hire one.
King also said town operations are not sustainable. “It’s likely that this is going to be the new status quo,” he said. “I think it is time to draw a line in the sand.”
King said property owners should decide whether to cut lifeguards and summer police or pay $150-$200 per household to keep the town afloat.
In June, the budget and finance committee proposed an annual property tax of $0.80 per $100 of each property’s assessed value. Council gave the proposal a cold shoulder, and each commissioner has said they would not support a property tax.
Commissioner Courtney Riordan, who is also the new chairman of the budget and finance committee, said, “There’s more to the equation David, and I won’t get into it now.”
Howell proposed an increase in the cost of a dog license, which is currently $15 for the life of a dog. Riordan said, “We’ve got to find a big solution. We’re in an unsustainable situation.”
Mayor Diane Hanson scheduled a meeting at 5 p.m., Friday, Nov. 30, to further discuss the budget.