DELAWARE

Rehoboth creating 5-year plan to stabilize finances

The Daily Times

The Rehoboth Beach City Commission, seen June 30, 2017.

After facing issues with their budget, a petition from upset constituents and a city hall project that ran millions over budget, the Rehoboth Beach commissioners decided to create a five-year plan to map out planned expenses.

City manager Sharon Lynn presented the commissioners Friday, June 30 with plans on how other towns have modeled their finances to ensure they keep their future planning on track, and the commissioners determined creating a five-year outlook was the most prudent move for the city.

"If we have a beginning baseline to know where we are and how we want to move forward, we'll know exactly where we're going," said Commissioner Patrick Gossett. "We have to have a place to start."

Issues surrounding Rehoboth Beach's finances include the construction of a new city hall and the budget passed March 17.

The construction cost the city $20.3 million, which was $2.5 million over the projected budget. The city had to pull $1.3 million from its cash reserve fund to compensate for the heightened cost of the project.

According to the City of Rehoboth Beach Chart of Fees in 2018, Rehoboth Beach predicts it will generate $1.05 million from the rental tax and $1.33 million from property taxes, and the town has already generated $175,767 from issuing building permits and $191,145 for issuing business licenses for 2018. The town will also generate more money from sales taxes.

Rehoboth Beach has a surplus, said Commissioner Paul Kuhns, but with the rising cost of health care and the rising cost of the workforce, Kuhns said everything is going up but revenue.

Kuhns said Rehoboth can budget for the next five years based on 2017-18. With 3 or 4 percent increases over the next five years, he feels it could lead to stability.

Mayor Sam Cooper said, although it is good to plan on having spending increases every year, he said the commissioners should still work to cut spending.

He said the town should take a look at the benefit package for employees, especially health care, and said this spending can be reined in.

If the benefits package is lowered, Cooper said it would save the town money in the future.

The commissioners worked together to come up with a plan for Lynn, who will present to the commissioners during their first September meeting an outline of the projected expenses for the next five years.

The commissioners plan on having a formal plan ready by October.

But creating a plan for expenditures was not the only thing the city commissioners discussed doing.

The commissioners also discussed how to create more revenue for the town.

"We are three months into the year (for the budget)," said Cooper. "To project what our surplus will be when we forecasted 100 percent of the revenues will be a folly. We are watching expenditures. There is not much more we can do about the revenues at this point. If it's a rainy weekend, then we aren't going to be getting as much from the parking meters."

Lynn said she does not recommend raising the parking rate in the town, however, commissioner Toni Sharp recommended raising the rental tax in the future.

She points to the fact the tax was last raised in 1995 to its rate of 3 percent.

The biggest question she gets, Sharp added, is why is the rental tax is only 3 percent, and the feedback she is getting from nonrental residents is they are questioning why it's only 3 percent when other coastal towns around Rehoboth have a higher rental tax rate.

"We already had numerous conversations about unfunded projects," she said. "Don't we have enough fundamentals around this to talk about if this 3 percent is equitable and second if it's already an item we need to discuss for potential increase because of unfunded projects?"

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