FENWICK ISLAND – A Fenwick Island committee voted last week to advance a draft of the fiscal year 2023 budget to the town council for approval.
Last Friday, the Fenwick Island Budget and Finance Committee voted unanimously to forward the proposed fiscal year 2023 budget to the town council with a favorable recommendation.
Councilman Bill Rymer, town treasurer, told committee members the first draft of the budget – presented last month – featured a projected net operating loss of nearly $240,000. Since then, he noted, that total had increased to roughly $295,000.
“It now shows a difference between revenues and expenses of roughly $295,000,” he explained. “We were expecting $240,000, but we all knew we had not finalized raises and those kinds of things.”
While changes to salaries had increased the operating loss, Rymer said it would be covered through realty transfer tax (RTT) funds.
“I want to highlight last year’s budget was an operating loss of $379,000, so year over year we’re projecting a lower loss, which is nice in helping to close that gap,” he told the committee. “Keep in mind how that $295,000 basically gets funded is it comes out of RTT revenues and the RTT fund.”
Rymer also told committee members last week a review of finances for the month of May revealed a higher cash balance than originally projected.
“Building permits continue to generate a lot of cash, so it was actually a strong month,” he said. “I’m expecting we’ll have more money at the end of the fiscal year … Hopefully we go into the next year, starting August 1, with a higher cash balance.”
After further discussion, the committee voted unanimously to forward the proposed budget to the town council for approval. Officials also thanked town staff and committee members for their help in developing the budget.
“It was a lot of teamwork,” said Councilman Richard Benn.
The committee last week also agreed to form a workgroup for the purposes of reviewing Fenwick’s rental tax rates. Officials noted the rental tax rate currently stands at 8% for residential properties, 4% for commercial properties and 3.5% for hotels.
“Looking at the deficit, we need to find as many sources of income to offset future deficits,” said Councilman Paul Breger, committee chair. “That’s going to require us to assess all of our tax revenues.
Mayor Vicki Carmean agreed.
“I think it’s good to do a comparison,” she said. “We’re not Ocean City, we’re not Bethany, but it’s good to see what’s going on around us … I think you are wise in having a committee look at this.”
Benn noted that the workgroup could also re-examine rentals in the residential district.
“There are a few year-round rentals, but most are vacation rentals,” he said. “If a lease is more than eight months, we may want to think about giving them the commercial rate.”
Rymer noted that 35% of rental tax revenues came from residential, while 50% came from hotels and 15% came from commercial.
“If you wanted to increase the hotel rate by 1%, it would generate roughly $60,000 in revenue. If you wanted to increase the commercial rate for retails and restaurants, that would generate roughly $15,000,” he explained. “This just gives you an idea of the impact of changing things 1%.”
After further discussion, the committee agreed to review the rental tax rates and make recommendations to the town council in the fall.
“I think we should be making a mid-season adjustment, so we can implement on January 1,” Benn said.
Councilwoman Natalie Magdeburger agreed.
“That gives everyone a heads up,” she added.
Committee members last Friday also reviewed the town’s parking collections and fees, with recommended changes sent to the town council for approval.