Bethany to hold hearing Monday on proposed 2017 budget
The Bethany Beach Town Council will hold a public hearing on the proposed budget for the 2017 fiscal year on Monday, March 14, at 10 a.m. at town hall. The Budget & Finance Committee will then meet on Tuesday, March 15, for any revisions, and the council is scheduled to vote to approve or modify the proposed budget at the Friday, March 18, council meeting.
The Town’s 2017 fiscal year begins on April 1 and ends March 31, 2017.
Probably the most distinctive change in the proposed budget is the addition of a new reserve fund, called the Storm Emergency Relief Fund (SERF), which Town officials said was created with Hurricane Katrina and Superstorm Sandy in mind and is intended to help the Town recover quickly in the event of a hurricane, nor’easter or other type of storm.
In the event of a large storm, they said, the fund could be used to repair or replace the boardwalk, as well as clean up debris and repair town buildings.
Initial funding for SERF is coming from the building permit and transfer taxes from the Bethany Ocean Suites Hotel project, which will provide $491,000 for the 2017 fiscal year and are expected to increase to $644,000 total in the 2018 fiscal year.
Funding SERF beyond the $330,000 already set aside to start it will also mean some increases in taxes for both residential property owners and those who rent property to others. The proposed 2017 budget uses those tax increases to fund the Storm Emergency Relief Fund (SERF) with $200,000 annually. The tax increases include:
• An increase in the property tax rate, from $0.175 to $0.185 per $100 of assessed value. That is a 6 percent increase and would take effect on the May 2016 annual bill. Officials said it would cost less than $20 additional for most (61 percent) of the town’s residential improved properties.
They estimated it will generate an additional $100,000 in revenue for the SERF reserve.
• An increase in the rental tax rate, from 6 percent to 6.5 percent for residential and commercial rentals, and from 3 percent to 3.25 percent for rentals subject to the State accommodations tax, such as hotels. That increase would take effect for property rentals as of May 1.
Officials said the rental tax increase will generate an estimated additional $100,000 in revenue for the SERF reserve, making $200,000 per year in total estimated revenue for SERF from those tax increases.
Councilman Jerry Morris had asked about the proposed rental tax increase at the council’s Feb. 12 workshop, being told by Councilman Chuck Peterson that the Town’s rental tax rate remains lower than in other towns in the area. Town Manager Cliff Graviet said the new rate would place it at the higher end of the scale, however.
Morris had suggested raising the rental tax rate by 1 percent, saying, “Summer visitors put wear and tear on our infrastructure. I don’t know that 1 percent is going to bother someone paying $1,000 per week.”
But Peterson had said there was concern about putting a disproportionate financial burden on visitors to the town, who would end up paying the difference through their rental rates.
Vice-Mayor Lew Killmer had also asked about the target for the fund’s total amount. Peterson noted that municipalities are being required to pay ever-increasing proportions of emergency recovery costs and said he felt that, at some time, the Town would want to have $3 million in the SERF.
“The message has been loud and clear,” Killmer said. “A 35 percent share is not going to continue to be matched for beach repairs. We have to be proactive, not reactive. We have to be our own self-insurer. There’s no way we could ever afford an insurance policy to replace the boardwalk.”
Mayor Jack Gordon emphasized in February that the fund is intended to repair damage done to town infrastructure, not to put sand back on the beach or rebuild dunes — areas where continued federal funding also remains tenuous. But Killmer said he felt that was indicative of a trend away from federal funding for recovery from storm-related emergencies.
Increases proposed for general, capital budgets
Beyond the new SERF, the Town has three other distinct funds that are budgeted separately. The General Fund, officials noted, uses revenue primarily from property taxes, parking fees, rental real estate taxes and real estate transfer taxes to pay the main costs of Town government, including the Bethany Beach Police Department, Public Works and the Beach Patrol.
In the proposed 2017 budget, General Fund revenue is increasing by $585,000 (9.8 percent), due to the proposed tax increases, as well as adjustments in revenue projections. Operating costs are also budgeted to increase, by $357,000 (5.1 percent).
The Capital Budget for 2017 totals $570,000, which includes $200,000 for street paving, $170,000 for construction storage and office space at the Town’s Public Works Yard near Frankford, $80,000 to replace the Town’s beach tractor, $60,000 for boardwalk improvements, $40,000 to replace a street cleaner and a lawn tractor, and $20,000 to construct a police shooting range at the Public Works Yard near Frankford.
The shooting range will require approval from the Sussex County Council, and neighbors of the property have already voiced objections to the idea. Officials have aimed to limit its impacts on neighbors by limiting its planned hours of operation to mid-day during weekdays, as well as constructing berms to protect neighboring properties from the gunfire and related noise.
The range will not be open to the public but is intended solely for required training by current BBPD officers and two of its retired officers, including Graviet, who was previously the Town’s police chief and a Delaware State Police trooper.
Additionally, the proposed 2017 budget calls for the Town’s Sanitation Fund revenues to increase $4,000 (.5 percent), while the sanitation operating budget is increasing $24,000 (3.2 percent). The sanitation capital budget includes $220,000 to replace a side-loading trash truck.
Water Fund revenues are being budgeted to increase $50,000 (3.7 percent), due to revised projections for water impact fees. The Water Fund Operating budget is increasing $71,000 (7 percent), which officials said is mainly from maintenance needs of the water storage standpipe.
The proposed Water Fund Capital budget totals $260,000 and includes $100,000 to construct an earthen mineral pond, $60,000 to replace a work truck, $50,000 for replacement of other equipment, if needed, and $50,000 for any unplanned repairs to the distribution system, as needed.
Revenue and expense budgets for all of the Town’s various funds are balanced in the proposed 2017 budget, as is the Town’s practice.
Continuing its conservative revenue budgeting trend, the Town is budgeting $550,000 in revenue from real estate transfer taxes — the same amount as in the 2016 budget— though the Town’s actual transfer tax revenue for the fiscal year through Feb. 29 is already at $671,127. Prior fiscal years’ transfer tax revenue was roughly $760,000 for 2014 and $822,000 for 2015.
On the expense side, General Fund costs are being budgeted at $267,000 more than in 2016, an increase of 5.1 percent, in contrast with the 9.8 percent increase in budgeted revenue over 2016. Townwide, the expense side budgets for $362,000 additional expenses, up 5.2 percent, and in contrast to a budgeted 7.7 percent increase in revenue.
The bulk of the Town’s costs for its Operating Budget go to personnel-related expenses, at 59 percent of the total budget. Contract services make up 28 percent of the Operating Budget costs, while supplies make up 7 percent, and operations and minor capital expenses make up 3 percent each.
Printed copies of the proposed budget for the 2017 fiscal year are available for review in the Finance Office at Town Hall. It can also be accessed online at http://townofbethanybeach.com/DocumentCenter/View/2112. The budget hearing is scheduled for Monday, March 14, at 10 a.m., with a possible vote to adopt it at the March 18 council meeting, which is set for 2 p.m., also at town hall.