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Some Dewey Beach officials say the town faces a $700,000 deficit in the current fiscal year, estimating the town will receive $500,000 less in income than budgeted, while spending $200,000 more than expected.
Budget and Finance Committee Chairman Dale Cooke said he met with Mayor Dell Tush, Town Manager Gordon Elliott, accountant Angelo Caputo and budget committee members Don Ziegler, David King and Marc Appelbaum Aug. 26, in response to a deficit that increased from $235,000 in June to $395,000 in July.
The meeting, he said, was to prepare for the Friday, Sept. 5 budget committee meeting.
Elliott said Dewey has approximately $1.4 million in reserves.
“We saved up for a rainy day and finally the rain has caught up with us,” said Cooke.
Budget committee member Mary Nelson and others blame the deficit on the estimated transfer tax revenue used in preparing the budget, calling the estimate unrealistic. During the Aug. 15 budget committee meeting, Nelson said that in 2006 and 2007, in estimating transfer taxes for budget purposes, the committee used half of the transfer tax received the previous year. She said the committee could not balance the budget if that procedure had been used for 2008.
Cooke says that claim is without merit. He said the committee considered the transfer tax issue before voting to recommend the budget to the town commissioners. “We took the amount of transfer taxes from 2007 and subtracted the $140,000 we were paid because of the sale of Ruddertowne, and that was the number we decided to use,” Cooke said. “We broke even last year, and we thought we would again.”
The committee recommended the budget, and the town council approved it. But Tush and Commissioner Diane Hanson said during the Aug. 15 meeting that they had not had time to review the budget before voting.
“When it comes to us Dec. 9 and the charter says it has to be confirmed Dec. 10, we have to confirm it,” said Tush.
“We don’t even have time to review it,” Hanson said.
Commissioner Rich Hanewinckel said he wouldn’t have voted for the budget if he’d been aware how the transfer tax income had been estimated.
But Cooke pointed out Tush is a member of the budget and finance committee.
“Are they going to tell me they didn’t understand it and voted for it, or didn’t read it and voted for it or didn’t care and voted for it?” Cooke asked. “If the commissioners didn’t understand it or didn’t like it, they shouldn’t have voted for it.”
Had they estimated revenues at a lower amount, Cooke said, “I’d like to know what they would have done differently, what they would have cut. Lifeguards? Police?”
2009 Budget process begins
Asked by Cooke to prepare an outline of points to be considered as the committee prepares to address the 2009 budget, committee member Marc Appelbaum presented a 14-point memorandum. He said responsibility is the hallmark of his suggestions, which incorporate requirements for prompt, regular and complete public release of financial reports.
“I want to see that someone is bottom-line responsible for each budget item,” Appelbaum said,
Nelson agreed. She objected to how money appears to be being juggled from one account to another. “None of this robbing Peter to pay Paul,” Nelson said. “You have to make each department live within the budget they’ve got.”
Committee member Bob Barry recommended the town hire a financial officer, even if it could be done only on a part-time basis.Dewey
Appelbaum asked what would happen if the town comes up with the best possible budget and revenues drop. “One of two things happen,” he said in answer to his own question. “We have to dip into the reserve or cut expenses.” The town would have to go to the department heads and tell them money is tight and cuts have to be made, Appelbaum said. Looking at the possibility of a $700,000 annual deficit, Appelbaum said, “You might ask yourselves, maybe I should start cutting something. Now!”
The Dewey Beach Budget and Finance Committee is meeting to address the current deficit and plans for preparation of the town’s 2009 budget at 10 a.m. Friday, Sept. 5, at the conference room of the Best Western Gold Leaf located at 1400 Coastal Highway.
Litigation costs a concern in Dewey
Dewey Beach Commissioner Dale Cooke said he believes the town can survive normal budget fluctuations, but he is concerned regarding increased expenditures for legal fees and the impact of possible future lawsuits.
Litigation expenses in a lawsuit by Eric Campbell against the police department cost the town approximately $140,000 from January through August, including at least $80,000 attributable to a settlement, the full terms of which are not a matter of public record. Town Manager Gordon Elliott said the town plans to sue its prior and current insurers, if necessary, to be reimbursed for the money it spent on the police lawsuit.
Town Solicitor Glenn Mandalas said he cannot comment at this time on the town’s position concerning its insurance carrier in the Campbell matter.
The town also incurred approximately $54,000 in general legal fees, unrelated to the Campbell case.
Ruddertowne owner Dewey Beach Enterprises (DBE) has filed an appeal of a Board of Adjustment decision denying it a building permit for a 35-foot high plan. That decision could prompt another lawsuit; the appeal contains a statement reserving DBE’s right to bring a civil suit in federal court, and the company has issued a letter to the planning and zoning commission, claiming that the town’s failure to comply with its comprehensive development plan is making DBE lose millions of dollars.
According to Elliott, the town’s current insurance coverage is for $1 million total, including legal fees, expenses and settlement money. Cooke said this adds to his concerns, especially if individual commissioners are sued and start hiring their own attorneys at town expense.
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