Lewes lowers proposed tax hike, budget meetings up next
The City of Lewes has lowered a proposed property tax increase from 20% to 5%, as mayor and city council prepare to begin discussions for the Fiscal Year 2026 budget.
City Manager Ellen Lorraine McCabe unveiled a draft budget, with the lower increase, to the city’s finance committee Jan. 28. McCabe is proposing a balanced budget of $16.082 million, which is $3.759 million higher than the current FY25 budget.
She also showed projected budgets for fiscal years 2027-30, the first time the city is working with a multiyear budget cycle.
“There have been a number of reviews done to push expenses over multiple years or to reduce a request. If a department manager requested two additional staff, maybe we reduced that to one, instead of doing two staff in one year,” McCabe said.
As proposed, 2% of the 5% property tax hike would provide seed money for a new resiliency fund, an estimated $62,400 per year.
Other funding sources for the resiliency fund would be:
• Chesapeake Utilities franchise fee – $20,000
• 2% of 5% of the gross rental receipts tax – $404,000. That would include revenue from a proposed lodging tax, which would launch in FY27.
• 2% of FY25 parking meter collection – $22,440
• 10% of transfer tax revenue collected – $285,000
• Balance of the Chesapeake Utilities bank account – $300,000
• One-time funding from transfer tax fund – $750,000.
McCabe said there would be $1.786 million in the resiliency fund in FY26. She said the fund is projected to have almost $5 million by FY30.
The resiliency fund is designed to help the city prevent and recover from natural disasters. Mayor and city council would place guardrails on the account to restrict what the money could be used for.
The police department budget is proposed to increase from $1.3 million in FY25 to $1.7 million in FY26. McCabe said most of that increase includes the addition of an 18th officer.
“We are including additional officers because in FY29, four of our current officers are eligible to retire. Because of the length of time it takes to train an officer, we don’t want to be hiring four people in one fiscal year,” McCabe said.
The police union contract expires March 31. The city will soon be starting collective bargaining talks for a new three-year contract.
Former Councilman Rob Morgan urged the committee to rein in police expenses, which are projected to be close to one-third of the budget in coming years.
“I’m not sure we’re predicting a crime wave,” Morgan said. “The police department expenses seem disproportionate to our real needs. [Council] should adopt a budget with an amount the city can afford and ask the police chief how he or she would allocate that money among the department’s needs. It would call on the expertise of the chief and be responsible for the budget.”
The proposed budget also reflects a $46,000 increase for the Lewes Beach Patrol to add four additional lifeguards, one additional hour of coverage seven days a week and coverage on the weekends in September. The beach patrol also wants to purchase a second ATV for $20,000.
The budget also proposes increasing the city’s contribution to the Lewes Fire Department from $75,000 to $96,000 in FY26.
McCabe said the city’s contribution to the Lewes Public Library would double in FY26 only, from $5,000 to $10,000.
McCabe’s budget also proposes adding one full-time staff member to the Human Resources Department and one to the Parks and Marina Department.
It also proposes doubling docking and building permit fees, and increasing permit fees for bonfires and weddings.
Mayor and city council are scheduled to hold budget meetings every week in February, starting Thursday, Feb. 13.
They must approve the FY26 budget by March 31. It goes into effect on April 1.
The entire budget proposal is available at lewes.civicweb.net.
