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Town Manager Gordon Elliott had no good news to present to the Dewey Beach Budget Committee at its Friday, March 14 meeting
“Do I believe you’re going to have a deficit? Yes,” Elliott said. “Probably $500,000; not the $350,000 I originally thought.”
The bottom line, Elliott said, is that income is less than the town expected and expenses are more than expected. Building permits are way down, rental licenses are down, interest income is down and the transfer tax has only generated $16,000 combined total for the months of January and February instead of the $100,000 that was projected for those months, Elliott said.
Though Elliott said he didn’t want to scare anybody, those attending the meeting did not appear comfortable as he pointed out the town’s assets have been decreasing since the start of 2006. “You had $2.3 million and now have $1.7 million. You’re tapping your reserves,” he said.
Budget committee member Don Ziegler attributed the town’s financial woes to many combined factors including high gas prices, a weak economy and overbuilding. Dewey, he said, must cut costs or increase income.
Reducing expenses
All present agreed that increasing revenue and decreasing expenses raised tough questions. For example, Ziegler pointed out that reducing services would reduce expenses but could also jeopardize the town’s relationship with tourists.
“There’s no way people in Dewey Beach will cut police and lifeguard services,” said budget committee Chairman Dale Cooke during a Thursday, March 20 interview. “They’ve been very careful and have cut expenses close to the bone. Perhaps they can be a little more diligent about overtime, but I’m leery about asking them to take another hit.”
Near the top of Gordon’s and Cooke’s lists of expenses that can be reduced are those for legal and other professional fees.
Work done by town planner Chris Fazio has expanded beyond that authorized by the town’s commissioners and expenses for authorized work on the zoning code and comprehensive plan already exceed allocated funds, said Cooke. He suggests a cap be placed on the amount that may be spent for planning and legal services.
Additional questions have been raised regarding requests that the town pay for private attorneys to represent Commissioner Diane Hanson and David King, who is a member of the town’s planning and zoning commission and budget committee. Those requests are to be addressed at a public hearing to be held at 2 p.m., Saturday, April 5.
Increasing revenues
Some budget committee members are considering a rental tax to increase revenue.
“We have to seriously think about a rental fee to be charged to renters coming in as tourists,” Ziegler said.
Mayor Dell Tush said the state is considering imposing a 3 percent tax on all residential rentals, prompting Ziegler to say that if the town is going to impose a rental tax it should do so quickly.
The decision to impose a tax, however, is not a speedy process, said committee member Bob Barry. It has to go to referendum and must be endorsed by the state Legislature.
Additionally, not having a local rental tax in Dewey could encourage people to stay in Dewey instead of going elsewhere, said King.
Resident Graham Smith agreed, saying a cost increase could result in having people not come back to Dewey, or come for less time.
Other areas that may be targeted for increases are parking fees and permit costs, with additional revenue available by enforcing existing requirements for licenses, permits and fees.
Commissioner Rich Hanewinckel, for example, suggested additional revenue would be generated by enforcement of existing business license requirements, including the requirement for real estate agents to be licensed to list and show properties in Dewey.
Tush recommended enforcing and increasing dog license fees. She also suggested increasing Dewey’s fine for littering from $25 to $250.
“None of these things are million dollar ideas, but you eat an elephant one bite at a time,” said Hanewinckel.
Cooke, Elliott and others are working to compile actual year-to-date figures to ascertain the town’s existing financial situation before implementing any fiscal changes.
CContact Georgia Leonhart at g.l.leonhart@comcast.net
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