Facing a budget deficit that has now ballooned to more than $4 million, Rehoboth Beach officials have increased parking meters by $1 per hour, parking permits by about 30% and the rental tax by 1%.

During a Feb. 16 meeting, Mayor Stan Mills said there’s a definite need to raise more money, and there’s not a lot that can be cut.

“There aren’t any wish list items,” said Mills, adding that every 25-cent increase in parking is expected to add about $500,000 in revenue.

Rehoboth Beach’s annual budget runs April 1 to March 31. As approved, parking meters are now $4 per hour across the city, non-transferable parking permits are $295, transferable parking permits are $325, weekly permits are $120, three-day permits are $60, daily permits are $25 and scooter permits are $55. The non-transferable and transferable permits decrease to $150 and $165 beginning Aug. 1. The increase in the rental tax takes effect April 1.

Commissioner Edward Chrzanowski said he’s not comfortable with the increases, specifically going from $3 per hour to $4 per hour for parking meters, but he didn’t see any other option.

Commissioners may have approved the rental tax increase, but Interim City Manager Evan Miller said it’s unclear how much revenue the city will actually see for the coming fiscal year because many of the rental agreements have likely been signed.

There are proposed increases in property taxes and wastewater rates too, but the commissioners delayed action on those items. The city can’t raise property taxes too much because the city charter doesn’t allow for more than $3 million to be raised through property taxes, and the city already collects a little over $2 million.

Even with the approved and probable increases to the property tax and wastewater fees, the city still faces a shortfall of more than $400,000, said Miller.

The biggest difference from the previous budget meeting to the most recent one was the increase in the deficit – which went from $3.4 million to more than $4 million.

During a budget workshop prior to the commissioner meeting, Miller said the increase in deficit was related to ongoing capital improvement projects being pushed into next year. Specifically, the State Road pump station project, he said.

The city has been working on the pump station project since May. The city budgeted $2.5 million in the current fiscal year for the project. This pump station is critical because all of the city’s wastewater flow, as well as the flow from Henlopen Acres and North Shores, goes through it. 

As of now, the budget includes fully funding financial requests from four of the city’s nonprofits – Rehoboth Beach Volunteer Fire Company for $200,000; Rehoboth Beach Public Library for $75,000; and Rehoboth Beach Main Street and Rehoboth Beach Museum for $60,000 each.

The parking meter and permit hikes don’t include a change to the length of the season, which currently runs May 15 to Sept. 15, but that could come next year.

That’s on the table when commissioners begin planning for fiscal year 2026 in April, said Commissioner Toni Sharp.

Commissioners and staff are scheduled to resume budget discussions Monday, March 4, after a commissioner workshop. Traditionally, the budget for the next fiscal year is approved during the commissioner meeting in March, which would be Friday, March 15.