Lewes taps $1.6M from reserves to balance budget

Lewes Mayor and City Council unanimously approved a $13 million budget for Fiscal Year 2027 at a meeting March 23, but it had to take $1.6 million from the city’s reserves to keep it out of the red.

City Manager Ellen Lorraine McCabe said revenue projections are down 3.2%, while expenditures are up 8.7%. She said the main reason for the deficit is a large increase in the cost of engineering and legal services.

Council included a provision in its approval to have a mid-course budget review in October to look at where revenues and expenditures stand, and adjust spending as needed.

In discussion before the vote, all members of council expressed concerns over the sustainability of dipping into the city’s $7 million reserve pool.  

“We need to do something to recalibrate our revenue to our expenditures,” said Councilman Tim Ritzert. “That ratio is not in balance, and it can be done by bringing a scalpel to this document and cutting additional expenses.”

“I agree it’s unsustainable if we continue that, but why don’t we just do an across-the-board slight cut for everybody to keep bringing it down?” said Deputy Mayor Khalil Saliba.

Other FY 2027 budget headlines include:

• No tax increase

• Parking meter rates raised 50 cents per hour across the city. Meters will now be $2 per hour in town and $3 per hour at the beaches, starting May 1.

• Police funded at the proposed $3.168 million figure.

Funding for the city’s year-old Resiliency Fund was deferred, at least until the fall budget review. McCabe had proposed $448,000 in resiliency funding.

Councilman Joe Elder said putting the money aside is the prudent thing to do.

“I’m not an anti-environmentalist, but I believe in fiscal management, following rules,” Elder said. “We need to be very, very cautious with our residents’ money.”

Council controls the money in the Resiliency Fund and receives recommendations from the economic, environmental and resiliency commission.

Mayor Amy Marasco, who was the leading proponent for creating the fund, said the deferral is not a setback.

“The resiliency fund is at about $460,000 – that’s very healthy,” she said. “The goal is $300,000 to $500,000 a year to get it up to the right level. It took a lot of conversation to do that.”

Mayor and city council stipends will double in FY 2027 to $6,000 per year for council members and $8,000 per year for the mayor. Marasco said she will not accept the increase in her current term. 

Saliba told the Cape Gazette that he will accept the raise because, “Serving is no longer part time, and I use most of my compensation to support local nonprofits.”

Councilwoman Trina Brown-Hicks sent a statement that said, in part, “Any increase to the stipend is not a factor for me personally. If it is in the best interest of the City of Lewes not to accept an increase, I am fully comfortable with that.”

Councilman Tim Ritzert said he will accept the increase, because it’s a way to recover some of the expenses he incurs performing council duties.

Councilman Joe Elder chose not to comment. 

Both Elder and Ritzert are running for re-election.

The budget cuts construction funding but preserves design money for three high-profile projects: the lifeguard headquarters building at Savannah Beach, a Johnnie Walker Beach replica pavilion and the fountain in Zwaanendael Park.

Another underlying driver for this and future budgets is the planning for a new municipal campus. Marasco calls it the largest infrastructure project the city has ever undertaken.

The FY 2027 budget includes $140,000 for a finance consultant and a construction project manager. The scope and cost of the project are unknown, but the city is looking at options that include renovating the current city hall building or the construction of a new campus at the former Army Reserve Center on Savannah Road.

Marasco said there are other funding options, including a $600,000 Brownfields grant the city can apply for.

Mayor and city council also unanimously approved a separate motion to fund its large and small grant program at $99,200. The draft budget proposed $100,000.

Marasco said she is pleased with the budget process.

“What I like is that this is year two of a multiyear budget, and it shows that it works,” Marasco said. “This council is much more active as financial stewards, and we have a great financial committee too, and that’s positive for everybody.”