FENWICK ISLAND – Fenwick Island officials kicked off the annual budget process this week with a review of the preliminary spending plan for fiscal year 2023.
On Tuesday, members of the Fenwick Island Budget and Finance Committee kicked off the annual review process for the fiscal year 2023 budget. Councilman Bill Rymer, town treasurer, noted the first draft presented this week features a projected net operating loss of over $230,000.
“Last year’s projected budget loss was $380,000 …,” he told the committee. “We are already sitting on a budget that, positionally, feels stronger than the budget that was approved last year.”
Rymer noted the current fiscal budget, when introduced last year, projected revenues of $1.6 million and expenses of $2.34 million. He noted the operating loss was typically covered through realty transfer tax (RTT) funds.
“The town receives 1.5% of all real estate transactions, it gets put aside to a separate fund, and then as the town needs funds for its operating budgets, or capital expenditures, funds are transferred into the primary accounts,” he explained.
Councilman Richard Benn said it had been common in recent years for the town to cover its losses with RTT funds.
“I’ve been on the budget committee since 2016, and I can’t remember a time when we didn’t use RTT money to cover an operating shortfall,” he said.
Rymer told committee members this week the proposed budget for fiscal year 2023 projects a loss of nearly $310,000, but with projected revenue increases he said that gap narrowed to about $238,000.
“I just want everybody to understand as you look at the expenses, what is not reflected are any raises to town employees,” he added. “I wanted the group to focus on what’s the budget outside of salary increases to understand where we are.”
On the revenue side, Rymer said he had proposed budgeting $275,000 for building permit fees, $480,000 for rental receipt tax and $740,000 for property tax.
“The actual year to date through April was $726,000 for last year …,” he said. “The budget for last year was $724,000, so property taxes were very much in line with the budget.”
Officials noted, however, that the proposed increase took into account new assessments.
“The assessed value of improvements was $8,423,000,” said Town Manager Pat Schuchman, “and your property tax increase will be $14,657.”
Rymer added, “The $740,000 was purely based on what we billed last year plus $14,000.”
Benn noted that rental receipt tax projections were based on varying tax rates. He questioned why the hotel tax rate was 3.5% and the commercial tax rate was 4%.
“I think that’s a conversation we’re anticipated to talk about …,” Rymer replied. “If there’s a conclusion that we should raise someone’s rates, we can revisit the $480,000.”
Rymer told committee members this week other projected revenue increases included $2,000 for the town’s ambulance service contract with Bethany Beach Vol. Fire Company, $6,000 for parking fines and $6,250 for lifeguards, to name a few.
“We have a contract with Delaware to have lifeguards on the unincorporated beaches,” he explained. “We just renewed that contract and negotiated a $6,250 increase in what the state pays the town. Typically, the last couple of years we’ve been losing money on that relationship.”
With the $71,000 in proposed revenue increases, Rymer said that brought the town’s revenue budget to $2,135,000.
“A budget is only accurate once, and that’s the moment you approve the budget …,” he said. “We do our best.”
On the expense side, Rymer said the town projected operating expenses to total $2,375,000, with salaries, benefits and insurance making up 73% of the budget.
“So when we look at the expense structure of running this town, $2.3 million, $1.7 million relates to salaries and benefits …,” he said. “There’s only $638,000 in expenses not related to payroll.”
In the expense budget, Rymer said the town had budgeted an additional $10,000 for government phones and IT, an additional $5,900 for non-salary expenses at the police department and a $12,000 in legal.
“The budget for 2022 was $28,000, and we’ve already spent significantly more than that. Our legal expenses year to date are $75,000 …,” he said. “I’ve presented an expense of $40,000 for next year because I do believe the significant activity we have experienced as a new town council will decrease.”
Officials also highlighted proposed capital expenses for the coming year, including $650,000 for the town’s sidewalk construction project. Rymer noted funding for a dredging project in the Little Assawoman Bay had been removed.
“We will continue to spend on consulting fees and the permitting process, but for budgeting purposes I do not anticipate that project happening this winter,” he said.
After a review of the town’s reserve funds, among other things, officials agreed to hold an executive session in the coming weeks to propose salary increases.
“I think the final decision has to be public,” said Mayor Vicki Carmean. “But as you hash it out, I think it’s usually done in executive session.”
