Dewey headed for another court challenge

March 15, 2013

When Dewey Beach incorporated, property owners, residents and businesses specifically did not want any additional taxes levied. It was thought that enough revenue could be raised through building permits, administrative fees, transfer taxes, etc. to run the town infrastructure. Except during the great recession of the last few years, that logic prevailed.

Because all surplus funds were set aside by previous commissioners and with a watchful eye on spending by town managers, Dewey has been able to more than financially survive when other towns went into debt. Unfortunately, even during lean times there are mounting expenses. Some are normal salaries etc., while others were brought on by the choices of the town commissioners.

During the worse recession in memory, the Dewey commissioners still saw fit to borrow almost $1 million for the Bayard Avenue repair project. The project was certainly necessary, but borrowing almost$1 million for the solution was, and still is, debatable. The simple fact is that the commissioners made that choice knowing full well that the town budget was already severely strained.

Now, the town complains that they need additional taxes to have a sustainable and predictable revenue stream and to replenish the surplus. To do that they want to impose a tax on just one group, the business community.

At various times the budget and finance committee has called their proposal a business license fee, a tax, a license fee based on gross receipts and a gross receipts tax based on a percentage of gross revenue. Also at various times, some committee members' logic was that the town needed the increased revenue to balance the budget. What they didn't always realize was that state law does not allow any town to simply raise license fees to cover budget shortfalls, no matter how bad that money is needed.

Some members and commissioners have inferred that the present accommodations tax is now paid by the property owners who rent their houses. Using this logic, they believe the business community should "pay their fair share" and make up the balance. In reality, they know the present accommodations tax was created to tax and raise funds from the tourists who come into town and rent property, and not to raise money from the homeowners.

The real estate companies and property owners are supposed to collect the tax in addition to the normal rental charges, just as the hotels do with the state accommodations tax.

Our town manager has reported that the town has approximately $2 million set aside in restricted and non-restricted investment and other accounts. If the town is truly having financial problems, then all of us, rental property businesses, regular homeowners, residents and average business owners alike, should contribute to rebuild the emergency surplus funds. Everybody should be willing to help, if and when it is honestly necessary.

Although they may mean well, the committee and our commissioners need to rethink the logic and arguments they are using. We all know that almost any additional fees or taxes imposed on and limited to just one town segment will likely lead to very expensive court challenges, placing the town even deeper into budget problems. We all need to work together and not just attack one group of our in town community, no matter how politically convenient that might be.

Dale H. Cooke
Dewey Beach

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