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Rehoboth eyes tax increase for capital improvements

Stormwater improvements, citywide paving on list of maintenance projects
February 1, 2019

Story Location:
229 Rehoboth Avenue
Rehoboth Beach  Delaware  19971
United States

Rehoboth Mayor Paul Kuhns says something has to be done to address much-needed maintenance problems in the city, even if it means raising taxes.

Stormwater and citywide paving are on the list of essential projects, he said.

Commissioner Pat Coluzzi agreed with Kuhns. She said she has a property in Florida and she gets an increase in property taxes every year. Rehoboth’s property taxes have been kept artificially low, and now there’s a lot of deferred maintenance, she said, throwing out an idea of taxing property owners who have second homes in Rehoboth.

Rehoboth commissioners began reviewing a second draft of next year’s budget Jan. 18. The budget is balanced with the addition of $855,000 in expected revenue from a yet-to-be-adopted 3 percent lodging tax on hotels and motels.

City Manager Sharon Lynn earlier presented commissioners a $21.4 million budget proposal that provided only $512,000 for the city’s $4.9 million capital improvement plan – $482,000 of which is an upgrade to the city’s parking department equipment.

At the Jan. 18 meeting, the general fund capital improvement budget increased to $1.4 million because of the assumed lodging tax revenue. In September, Rehoboth commissioners voted in favor of a charter change that would allow the city to impose up to a 3 percent lodging tax on hotel and motels. For the tax to be possible, the General Assembly has to approve it. As of press deadline Jan. 30, a bill for this charter change had not been introduced.

Currently, visitors who rent houses or other residential units pay an accommodations tax of 6 percent, raised from 3 percent in November 2017. The new tax on hotels and motels would not affect residential renters.

Commissioner Stan Mills said he didn’t think it was a good idea to include lodging tax revenue in the budget because he said it sends the message that it’s already a done deal.

Commissioner Toni Sharp said she didn’t want to completely take the idea of the lodging tax off the table, because if taxes and fees go up to pay for capital improvements, she said everyone should help pay.

Public Works Director Kevin Williams said a $455,000 project to fix stormwater issues on Wilmington and Delaware avenues was absolutely critical. He said either nothing could happen or the Boardwalk could collapse because the pipes are rusting away.

Williams said the city should really plan on $200,000 for the second phase of a streetscape project on Lake Avenue. He said that was the city’s portion of a $1 million project from the Delaware Department of Transportation.

A proposed $25 increase in residential trash per season – in-season, from $250 to $275; out-of-season, $275 to $300 – remained from the first draft budget to the second. This is expected to generate approximately $64,000 in revenue.

Williams also said the city needs a new trash truck, which would cost approximately $162,000. He said this is a replacement vehicle, not an additional vehicle.

Commissioner Lisa Schlosser said last year, commissioners discussed getting out of the trash business, and she wanted to know if Williams and Lynn had looked into that.

Williams said they reached out to some waste companies, and he said there would be a real reduction in services. It was not a very positive meeting, he said, adding that summer trash staff not needed during winter months are used to prepare for the next season. There’s a need for them in the off-season, he said.

Lynn said some savings have been realized because longtime employees are retiring, and she said their replacements will start at a lower wage level. She said the city will keep the operational integrity of each department, but every open position may not be filled.

The proposed budget includes a 2 percent pay raise for full-time employees, permanent part-time staff and seasonal employees, an estimated expense of about $100,000.

The commissioners tasked city staff with preparing a table of potential revenue if certain taxes, fees and grants are taken into account.

Lynn’s latest proposed budget calls for a 60 percent increase in wastewater rates and a 30 percent increase in water rates. In addition to beginning to pay for the $42 million outfall, the proposed increases begin to pay for roughly $4.8 million in improvements to the city’s water system and roughly $12.4 million in improvements to the city’s wastewater system the city’s engineer has recommended through fiscal year 2023.

Rehoboth’s budget runs April 1 through March 31. The next budget meeting is scheduled for Monday, Feb. 4, in the commissioners’ room of city hall, 229 Rehoboth Ave.