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The 2008 deficit continues to mount in Dewey Beach, and budget and finance committee members say without changes, next year will bring more red ink.
City officials have been cutting noncritical expenses, but the 2008 deficit rose from $526,000 in August to $640,000 in September. Budget committee Chairman Marc Appelbaum said if the town’s records were handled in a more conventional way, the deficit is closer to $700,000. To make matters worse, the first draft of the 2009 budget projects a deficit of $356,000. The 2009 budget must be approved by Wednesday, Dec. 10.
“Where is this deficit going to be by the end of the year, and what are we doing about it?” Appelbaum asked during the Friday, Oct. 31 budget and finance committee meeting. “This current year should be sobering for us. We’ve depleted our surplus from approximately $1.8 to approximately $1 million,” Appelbaum said.
Appelbaum said salaries and wages are part of the problem, but it doesn’t seem as if anything was cut because they were, as in previous months, higher than projected.
Town Manager Gordon Elliott said the town has already cut back on staff. September’s figures were higher than budgeted because they included payment for 10 workdays during August, a billing cycle situation that typically occurs twice each year, he said.
New revenues needed
Appelbaum said the town needs a budget that is realistic and that balances, which will require increasing revenues. “Some may consider a property tax,” Appelbaum said. “Some may consider increased licenses.”
Several committee members said the town must look at new, long-term and stable revenue streams, including the possibility of a property tax.
“The rosy picture is not going to turn around overnight,” said committee member Bob Barry. He said all reports he’s heard project a very negative financial picture for 2009 and beyond. “The rosy part we had from 1998 through 2005 is not going to come back quickly, and if it does come back, expect it to take a long time.”
Committee member Steve Huse agreed. “One of the problems with the 2009 budget is that you’re not going to hit it unless you do something extraordinary such as sell off assets, cut hours, cut payroll, lay off people. And you can’t look at the department heads to do this. They have no experience. They need some guidance,” Huse said.
Appelbaum said fixed assets are not part of the town’s operational budget, prompting Huse to say liquidating assets is something to be considered. “What would you do in your family? I’d think about selling a car,” Huse said.
An end to overspending
Appelbaum said Dewey needs a balanced budget and needs to stick to it. He said he has one consistent message for department heads: “You can’t overspend. It is not within your purview to overspend.”
Appelbaum also said department heads are not to be held responsible for revenue, but only for sticking to their budgets.
Citing various possible emergency scenarios, including the power outage that occurred in August 2007, Police Chief Sam Mackert said a fixed police department budget is not realistic.
Committee member David King said a built-in budget buffer of about 5 percent could be appropriate for unanticipated events that are reasonably foreseeable. He said appropriations must be available from the general fund for unforeseeable emergencies.
Applebaum said if the town has an emergency it will deal with it. “We don’t stop and shut down, but we don’t spend money and then 60 or 90 days later try to explain it away.” Appelbaum said department heads have an obligation to protect the town’s interest and not overspend their budgets without promptly notifying the town.
“…While our revenue is a half a million dollars down, we’re close to a quarter of a million dollars in overspending. That quarter of a million dollars didn’t come from emergencies,” Appelbaum said.
Legal and professional fees
Appelbaum said the town’s legal fees are enormous, citing more than $36,000 paid in September for bills generated in July and August. He described the professional fees expense line as a quintessentially out-of-control budget item where a lot of things get dumped, including $38,000 for the town planner.
Mayor Dell Tush said they would not be a major problem in 2009. “One thing we do know is that our legal fees and professional fees are going to go down dramatically because we are at the tail end of doing our comprehensive plan. Once the plan is finished, then those expenses are going to go away.” Tush also said regular legal fees will continue.
Dewey budget workshop cancelled
The Dewey Beach town commissioners’ budget workshop scheduled for Friday, Nov. 7, has been cancelled because the budget and finance committee is not yet prepared to submit a draft budget for the commissioners’ review.
Instead, budget and finance committee members will meetat 2 p.m., Friday, Nov. 7, to address issues regarding income, personnel and other overhead. The meeting will be held at the Lifesaving Station, 1 Dagsworthy Ave.
Dewey’s September profit and loss statement is available online at townofdeweybeach.com under the heading “Budgets.” It is dated Oct. 23, 2008.
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