The recent claim by a commissioner that Rehoboth Beach faces a $12.5 million deficit demands correction. This figure is misleading and does a disservice to residents trying to understand our city's fiscal health.
The word deficit in context of a budget has a specific meaning, and is used to describe an annual budget where expenses exceed revenues. The city has an operating surplus for Fiscal Year 2027, with projections showing surpluses through 2031.
Let me be clear: Rehoboth Beach does not have a $12.5 million deficit, nor is one looming.
The city draws on its fund balance, not to cover operating shortfalls, but to fund planned capital improvements in infrastructure that strengthen our community for the long term. This not only is embraced as best practices in governmental accounting standards, but is also prudent fiscal management.
Just as you try to keep enough money in your savings account to cover foreseen and unforeseen expenses, the city must always keep a minimum amount in its coffers. That minimum amount is determined by formula, which includes enough to cover things like disaster funding, three months of operating expense, a year’s worth of debt service and capital improvements paid for in the current fiscal year.
That policy currently requires the city to keep at least $34.5 million in fund balance. The city’s total fund balance stands at $77 million, and $53.5 million of that amount is unassigned, meaning it is available and not earmarked for other uses or restricted. In other words, the city has $19 million more than the $34.5 million requirement.
The $12.5 million figure the commissioner cited appears not to be related to any deficit, but rather is the total cost of potential capital infrastructure projects spanning 2028 through 2030. These are planning projections, not approved expenditures. Most require a public hearing and commission approval before a single dollar is spent. Presenting this aspirational list as a deficit not only misapplies that term but also distorts the facts.
Creating the illusion of a fiscal emergency undermines public trust and distracts from the genuine work of responsible budgeting. Fiscal conservatism is not measured by alarm, but by stewardship. I am squarely focused on spending wisely to protect and advance the interests of residents, property owners and businesses alike.
Rehoboth Beach is on solid financial footing.
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