Millions over budget, Rehoboth takes heat on spending

As the Rehoboth Beach Commissioners officially adopted their budget for Fiscal Year 2018, residents and some commissioners argued over what they said is a need for better fiscal planning.

The controversy began with the City Hall project, an expenditure that sits at a total of $20.3 million, $2.5 million over the projected budget. The city ultimately decided to pull $1.3 million from its cash reserve fund, referred to as the "rainy day fund" and valued around $6 million, to compensate for the heightened cost.

The commissioners cited the addition of handrails and stormwater management, among other things, as reason for the project's spike in price.

For Commissioner Paul Kuhns, that reason wasn't good enough.

"We're pulling from our rainy day fund, but it's not raining," Kuhns said. "We need transparency here. People are seeing the news articles, and they are asking what's going on here. Do we have a plan, by Jan. 1, to replace that $1.3 million?"

Kuhns noted that a hike in price can always be expected in a large-scale project, but the exceedingly high rise in the cost of the City Hall was beyond reasonable, he said, and requires better future action.

READ MORE: Rehoboth City Hall project $2 million over budget

"We start at $16.7 (million), end at $20.3," Kuhns said. "That's huge. Things come up, of course, but do they come up at the rate of 25 percent? Yes, but where were our engineers. This seems like items that were missed by the architects, and is coming out of our pockets."

The passage of this budget, a total of $23.9 million in proposed government expenditures, was the most difficult in his 19 years of dealing with budgets, Commissioner Stan Mills said.

"I can only express disappointment toward our municipal complex group by designing this new building," Mills said.

While the City Hall expenditure will by no means put Rehoboth Beach in the red, Mills, who referred to himself as very frugal with city money, noted that the cost being so far above the expectation creates a need to better understand how the city spends its money.

"This is not just lack of money," Mills said, "but the need for discussion on how to control cost."

Resident and former commissioner Walter Brittingham argued that the problem was solely in the commissioners' willful lack of transparency. Brittingham noted that the commissioners could not even name every new technology and security amenity being placed in the new City Hall.

"I don't think anyone in this room knows everything in this building," Brittingham said. "You shouldn't be approving this budget; you haven't been transparent with the people."

The lack of specific notations on the use of funds in the budget, for items like a $4,000 increase in "other supplies" for the police department, listed in the budget as an increase from $2,000 to $6,000, Brittingham said, was an attempt to hide misuse of funds.

"What accounts for that $4,000?" Brittingham said. "Is there any reason? You haven't voted on a single thing in here."

Angrily punctuating silence from the commissioners, and agreement from Mayor Sam Cooper that no one in the room could name everything in the new building, Brittingham vented into the microphone.

"You should be ashamed of yourselves," he said.

Mills echoed Kuhns' sentiment that there needs to be a plan to keep the reserve fund healthy.

"We have a $6 million rainy day fund, have spent $1 million for City Hall, and we have no policy on how to replenish that," Mills said.

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For Fiscal Year 2015, the city of Rehoboth borrowed $18 million through the United States Department of Agriculture's rural Development Community Facilities program for the project. The program provides low-interest loans and grants for development of rural communities with a population less than 20,000.

That $18 million, Commissioner Kathy McGuiness said, should have been discussed more.

"Should we have borrowed more than 18?" McGuiness asked.

The scrutiny of the budget, McGuiness said, was an issue that was pervasive in the community, following her at every corner.

"I have people calling me, emailing me, coming to my office, stopping me at the grocery store, coming to my home, coming up to me when I'm out to dinner," McGuiness said. "People want to know what's going on, and there are still questions that need to be answered."

McGuiness also noted concerns with the addition of new permanent positions, including a public works director, as not being discussed enough.

"We're supposed to be good stewards of the community, and frankly, it's embarrassing we've gotten where we are," McGuiness said. "I am not confident with what I have in front of me today. I've never not voted for a budget, but I will not vote for this budget."

Commissioner Toni Sharp, in favor of passing the budget, asked McGuiness what her questions were.

"That's for me to discuss with (City Accountant Burt Dukes)," McGuiness responded. "You do what you think is right, and I have to do what I think is right."

For Mayor Sam Cooper, the argument that the City Hall project was exceedingly over budget was "revisionist history."

"The day we accepted the bid, we were $600,000 over," Cooper said. "It was at $19.4 million when we approved the bid. Am I happy we are where we are? Absolutely not. Am I happy we will have a City Hall? Absolutely."

The building itself, Commissioner Lorraine Zellers said, is an investment in and of itself, and not simply an expenditure.

"That's not just a City Hall," Zellers said. "It's public safety, it's police, it's a true municipal building. This is a complete complex, and we need to suck it up and move forward."

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Noting the concerns from the commissioners, Cooper said better planning and transparency will be needed in the future.

"I don't think expenses are properly shown (in the budget)," Cooper said. "The million from the rainy day fund is not represented."

Ultimately, the $23.9 million proposed budget was passed, receiving all but one vote from the commissioners. McGuinness stood as the sole nay vote.

"I still have questions that I need answered before I can vote on this budget," McGuiness said.