Berlin Needs To Follow Standard Best Practices
The Government Finance Officers Association website details best practices for the level of fund balance that should be held by local governments. While they make exceptions for cities facing unusual financial situations or threat of natural disaster, the rule of thumb is two months of operational expenses (16.7%). In 35 years working in local in government finance, including as town administrator in Berlin between 1987-1990 and eight years teaching governmental budgeting as an adjunct professor, I have found that most governments have a written policy to plan for a range of 10-25%. The proposed Berlin budget is raising taxes to reach a fund balance of 100%.
Although it may seem that the higher the fund balance the better, there are several negatives for the government, residents and businesses. For the government, an excessive fund balance encourages profligate spending. The money is just sitting there in fund balance so it becomes easy to spend it. Purchases of land and construction of buildings are paid for with fund balance without the need to go through a normal budgeting process. The correct procedure would be either to borrow money and dedicate a funding source to repay the debt or pay as you go and do the project over time.
An appropriate fund balance forces the government to take the annual budget process seriously and adjust revenues and expenses each year rather than relying on fund balance, transfers and loans between funds to avoid having to raise taxes and fees.
For residents, there is an issue of generational equity. The excessive fund balance held today was paid for by current and past residents through their taxes. Paying for a new park or police station with fund balance does not benefit people who may no longer be in the town but whose taxes built up the fund balance over the years. When capital expenses are financed through debt or pay as you go, the asset provides an immediate benefit and is then paid through future taxes by the residents who enjoy the improvement over its life.
For the business community, the money that is held in fund balance is money that does not circulate through the local economy. The taxes taken from residents and businesses, in this case $2.7 million, is money that cannot be invested into business improvements and expansion and money that cannot be spent by residents in the community to support those investments.
The town’s website says it plans to create a written reserve policy in 2020. It seems that the debate over a proper policy should precede an unusually large tax increase to establish a reserve balance that has no policy foundation and is not consistent with best practices for local governments around the country.
Pompano Beach, Fla./Glen Riddle
I want to thank the Berlin Little League Board of Directors and President Nornie Bunting for the service award that I received on opening day, Saturday, April 13. This is an honor that I truly appreciate.
Being in the parade brought back many fond memories of my time spent at the Berlin Lions Den fields. I played little league baseball at this same location 60 years ago. My sons played baseball here between 1984 and 1994. My wife, Cam, and I were active as volunteers and officers for several years afterward until about 2002. This year I have a granddaughter and a grandson playing in the league.
The Berlin Little League is an excellent organization that requires a lot of dedicated volunteers to operate from year to year. Cam and I met and worked with many other volunteer parents on these fields and established life-long friendships that are so important to us today. We will always cherish these memories.
Again, thank you for the honor and for all of your continued service and dedication to the Berlin Little League.
My wife and I moved to the Oceans East Apartments in Berlin about three months ago from New Jersey.
We are post-retirement age and can no longer afford the continuing high costs of maintaining an aging home or paying for someone to keep up with the maintenance.
Additionally, we came from an area where utility outages were becoming the norm with every storm, and utility companies paid lip service about improving the situation without really solving it.
All this in the face of taxes rising way above those in Maryland.
We vacationed often in North Carolina and often thought about retiring there. However, the area we liked was plagued by flooding for the last three or more years.
We heard about how great Berlin was and were delighted when we visited Memorial Day weekend two years ago.
We also decided on this area because it is isolated from the weather extremes of North Carolina and is near Ocean City, which we often visited during childhood.
We found, in our search for a retirement home near Berlin, however, that many of the single-family rental homes advertised on the Internet either were unaffordable, too run down to make livable or went off the market right after they were advertised.
We looked at a model two-bedroom, two-bathroom apartment at the new Oceans East Apartment complex and were delighted with what we saw. We then signed a contract and moved in Feb. 1.
Since then, we have found our apartment to be quiet, roomy and extremely well-maintained — as is the entire complex.
The complex management also is extremely efficient and responsive and anxious to make life interesting and enjoyable for every resident. They also appear to be handling the growth of the complex in the best interest of all the residents and officials of Berlin.
Our real-life experience is contrary to negative comments from some residents and officials of Berlin concerning our home area — Oceans East.
We wish some homeowners in Berlin would stop looking down their noses at tenants. We also are residents of this town who also share in the tax burden.
If you have problems with town planning, budgeting and/or tax increases complain to those responsible and stop attacking Oceans East and your fellow Berlin residents who live here.
Bob and Joan Faszczewski
Sprinkler Claims Wrong
I was very angry after reading the article in your April 5 edition concerning the potential for Ocean City to waive the Maryland requirement that a sprinkler system be installed in new homes built in Ocean City. The article references statements made by Greg Demarco who wants to build a new home in Ocean City and is lobbying the council to waive the Maryland requirement for sprinklers. Several of the statements made were incorrect and require a response. The first is that a sprinkler system would add $10,000 to the price of a new single-story home and $20,000 to the price of a two-story home. When sprinklers are planned and installed when the home is being built, the cost is roughly half the cost associated with installing sprinklers in an existing structure. For new construction, the price is in the range of $1-2 per square foot and I have seen a quote of $6,000 for a 4,500-square-foot home. The other comment is that sprinklers make some sense for rural properties because it takes longer for fire response. Actually, rural properties are the ones where an exception might make sense. If a rural property relies on a well for a water source, a well water system lacks the capacity to provide sufficient water to sprinklers. To provide any level of protection, the rural homeowner would have to install some sort of storage for a large amount of water, install a high capacity pump, and protect everything from freezing in winter for the system to work. This would greatly increase the cost of a sprinkler system. This high cost coupled with the fact that a house fire in a rural area is not likely to impact neighboring houses because they are some distance away could be the basis for an exception.
This is one reason why Worcester County should make an effort to provide public water to all properties in the county. It is not just a convenience issue but related to safety.
Depending on the fire source, a fire in a typical house in Ocean City could be totally out of control and damaging neighboring properties before the fire department could get it under control. The retrofit cost for existing houses is one valid reason to grandfather these properties, but not for existing homes.
If the Council is seriously considering a waiver, I certainly would like an explanation as to how the same consideration was not given to some of the high-rise buildings. With many of the high rises, the typical unit is a concrete shell. You have a concrete floor, a concrete ceiling, and concrete surrounding walls. Certainly, the materials within a given unit can and do burn. However, if the chases between floors have been constructed properly, any fire is confined to the source unit. I have seen unit fires in two high rises where this was indeed the case – total destruction to the interior of the originating unit with no impact to surrounding units. In spite of this, many high rises were required to retrofit sprinkler systems costing as much as a million dollars or more. The Maryland law requires sprinklers in new construction and the Ocean City Council would be waiving its obligation to public safety to exempt new construction in Ocean City
Candidates Forum Planned
Snow Hill Now© (SHN) will host its candidate forum on April 29 at 6:30 p.m. at Snow Hill High School. All candidates, seeking office in the May 7th General Election, are invited along with the public. Don Rush, news director of Public Radio Delmarva at Salisbury University, will be the moderator for the forum. Don is an award-winning journalist, covering developments, the environment, and local politics.
Almost 200 residents of Snow Hill participated in two community forums held by SHN. The first forum convened at the middle school, Feb. 6, 2019, addressed the issues of how to revitalize the Town of Snow Hill. Four outcome statements were presented to the attendees by the organizers. The attendees were sub-divided into discussion groups, and at the close, each group reported their findings to the larger body.
The data from the first forum was analyzed and placed into five categories. This information was posted online for participants, which attended the first forum, to prioritize and rank.
The second forum, April 1, 2019, was built upon the first forum by asking the attendees to prioritize the finding from the data and rankings. The outcome of this process established the top five priorities that the citizens have determined are the issues they want their elected officials to address.
We found that we all shared a greater number of concerns and aspirations then we might have realized but there were still areas that needed to be addressed. Specifically, the sense that there are two distinct Snow Hill’s divided along lines of class and race. Addressing this concern during the second forum the attendees were again sub-divided into discussion groups and later reported out their findings. These sessions were intense and emotional, but this is where we can be encouraged. People listened to each other. They heard others’ pain and felt the scars that were inflected by racism and separation dating back to childhood and high school days. People shed tears.
Nevertheless, this is Snow Hill Now. The same people, black and white, that attended the forums want to heal the divide and be a part of the revitalization effort. The number one issue, which came out of the community forums, was communications. What the forums demonstrate is this community’s capacity to listen and its desire for change.
The question is what about our government? Have they heard what the people said they want? Are those seeking office willing to move government towards a business friendly and open government?
The candidates forum is your opportunity to hear from the candidates in whom you will place your trust on May 7 to lead the town’s revitalization effort. Regardless of your choice or who you vote for, without concerted leverage there will be no true accountability.
SHN is committed to continue its mission of engaging the community in helping the town to thrive and grow. We hope to have your support and see you April 29 at the high school.
Edward S. Lee