Lewes gets to work on 2021-22 budget

After a year unlike any other, Lewes Mayor and City Council has started to work on the budget for the next fiscal year, which begins April 1. 

The $6.5 million balanced budget estimates a revenue decline of 3 percent in part because of an expected lower take from parking meters due to the ongoing pandemic.

Despite the revenue drop, City Manager Ann Marie Townshend has asked city council for several staffing changes. The city has already approved promoting the parking enforcement supervisor from part time to full time. She is also requesting the city hire two additional parking enforcement officers to help with increased enforcement along the residential streets of Lewes Beach. Police Chief Tom Spell requested a staff increase of one officer, and the maintenance department is seeking additional staff. 

For existing employees, the 2021-22 budget includes 1.3 percent pay raises based on cost-of-living increases. 

In addition to the general fund budget, the city also has an operating budget of $1.47 million. This year’s proposed budget dropped 3.2 percent. Townshend expects to see an increase in costs associated with trash removal, cellphone coverage due to more employees working from home, insurance, and engineering, among other items. However, she anticipates a decrease in costs for bank charges, utilities, ground maintenance, advertising, gasoline and technical equipment. 

The city is estimating $1.75 million in transfer tax revenue in the coming year. With a month and a half left in the 2020-21 fiscal year, the city has already collected $1.758 million.

“The great thing about the transfer tax is when the real estate market is booming, it just flies in,” Townshend said. “The bad thing is when the market takes a downturn, it dries up almost immediately.”

There are several capital projects the city has on its docket that are not funded in the current draft of the budget, but could be paid for through unspent money from the prior fiscal year. Those include improvements to Monroe, Adams and Railroad avenues; improvements to parking lots at Schley Avenue, Otis Smith Park and M&T Bank; beach parking lot lighting; implementation of wayfinding signs; new bathrooms at the Margaret H. Rollins Community Center; police department renovations; body cameras for police; a new trash truck; and vehicles for the maintenance department and parking enforcement. 

As it stands now, the budget would pull $384,500 from prior-year reserves. However, because the budget is conservative, revenues traditionally outperform expectations, Townshend said.

“Before we talk about the need to increase revenue [to balance the budget], I think we need to figure out [if] we’re doing any damage by pulling out of reserves,” said Deputy Mayor Bonnie Osler. “If the bucket is being emptied, but also being refilled, then we don’t have to worry about increasing revenues.”

Townshend said projections on excess revenue for the current fiscal year will be available at council’s next budget meeting.

Besides cutting expenses, Townshend said there are several options to increase revenues. Property taxes have not been increased since 2011. For every cent property taxes are raised, the city will see an additional $45,000. A one-cent increase would translate to an additional $14 on the average residential tax bill. Another option is to raise parking meter fees in the downtown district. The hourly rate has been at $1 since 2015, and an increase to $1.50 per hour would raise estimated additional revenue of $136,000 to $140,000 for the city. 

The gross rental receipts tax was last increased from 3 percent to 5 percent in 2009. Osler said past studies have found that 5 percent is about the maximum the city should charge.

The fees for mercantile licenses were last increased in 2015. Councilman Andrew Williams said an increase for business owners could be a kick in the mouth during a difficult time.  

Lewes Mayor and City Council will meet virtually at 1 p.m., Friday, Feb. 12, to continue discussion of the 2021-22 budget. Officials are expected to discuss budgets for individual departments at the meeting, including maintenance, parks and marina, building, planning, city manager’s office and finance. Meetings will continue every Friday through March 12. A link to the meeting can be found on the agenda at lewes.civicweb.net.