Dewey approves budget with higher legal fees

Council suggests $170,000 for regular counsel, lawsuits
March 18, 2013

Dewey Beach Town Council is not expecting to get out of legal heat anytime soon.  Council voted March 8 to approve its budget for fiscal year 2014, but not before giving itself more breathing room for legal fees.

Commissioners unanimously approved a $2.5 million budget, adding $44,000 to the proposed $126,000 for legal fees.

The town’s regular legal fees for fiscal year 2013 – which ends Sunday, March 31 – are expected to reach $115,000. Town Manager Marc Appelbaum recommended budgeting $96,000 for the coming year.

Commissioner Courtney Riordan suggested raising Appelbaums’s budget for regular legal fees to $120,000.

Riordan made the suggestion on behalf of the budget and finance committee, which he chairs.  He noted a proposed gross receipts tax on in-town businesses as one of the reasons for the increase.

Business owner Alex Pires filed a class action lawsuit against the town on behalf of six of his establishments in Dewey Beach. The lawsuit, filed in February, claims the town uses business-license fees to fund operations, calling the fees an illegal tax.

“I’m still not sure $120,000 is high enough,” said Commissioner Joy Howell.  She also suggested raising the separate budget for lawsuit-related legal fees.  “And if we come in under-budget, great,” Howell said.

Lawsuit legal fees are expected to cost the town $28,000 for fiscal year 2013, half of what they were in 2012.  Appelbaum’s budget suggested $30,000 for 2014, but commissioners agreed on $50,000.

Mayor Diane Hanson said legal fees have gone down in recent months, but she supported the increases.  She said if the town could get its legal costs down to $10,000 per month, a budget of $120,000 would be appropriate.

Appelbaum said in the last five months, regular legal fees have averaged $6,000 per month – thousands less than previous monthly averages.  He said he plans to continue to scrutinize the town’s legal process.  “I think there’s things we could do to reduce it,” he said.

Appelbaum also lowered the budget for administrative costs by $85,500 and lifeguard operating costs by $21,000.  The budget for year-round and seasonal police got a $50,000 bump.

Appelbaum noted council was raising two budget items, but not lowering any others to balance the increase.  “There is about 400 cells in this budget,” Appelbaum said.  “Everything is in competition for this $2.4 million that we generate.”

Town employees could look at the increase and wonder why they have not received a raise; members of the community might also disapprove of allocating more money for legal fees, Appelbaum said.  “We need to listen and respond to the community,” he said. “I think it’s a very sensitive area.”

“Well, I’m sensitive to being sued,” Howell said.  “I think we have to be prepared.”

Even with the increase in legal fees, Appelbaum’s budget includes a surplus of $56,000.  The town depends largely on parking fees, transfer taxes, accommodations taxes and business licenses for revenue.  It is the only municipality in Delaware without a property tax.

A $50,000 loan payment – which was used to fund a drainage project on Bayard Avenue – was eliminated from town expenses.  The loan payment will instead come from the town fund for streets and infrastructure.

The budget includes $17,000 for employee bonuses, the first time since 2010 any money has been budgeted.

Appelbaum served as a commissioner and as chairman of budget and finance committee from 2008-2010.  During that time, he flipped a deficit of $722,000 into a surplus of more than $300,000.

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