Rehoboth approves 29% increase to property taxes

Rehoboth Beach commissioners approved a 29% property tax increase during a June 21 meeting. As approved, the rate went from $0.06 per $100 of assessed value to $0.0775, and it is expected to generate roughly $590,000 in additional revenue.

It’s reasonable for property owners to pay their fair share, said Mayor Stan Mills. The cost of everything has gone up, and the city can’t keep going to the same well, because the well might dry up, he said, referring to parking-related revenue.

This is the first property tax increase since the city’s Fiscal Year 2020 budget was approved in March 2019. That year saw a 50% increase – from $.04 to $.06 per every $100 of assessed value.

The property tax increase was one leg of a multifaceted approach to balance a $38.7 million budget that commissioners approved in mid-March for a fiscal year that began April 1. The staff-proposed budget had a projected shortfall in excess of $4 million. Rather than cut expenses, commissioners voted in favor of increases in property taxes, parking rates, rental taxes and wastewater meter fees. There’s also a proposed 20% increase in mercantile license fees, but that measure hasn’t been voted on yet.

To fully balance the budget, commissioners also adjusted the projected revenue from Dewey Beach’s wastewater fees by $300,000 and decreased the administration contingency fund by $100,000.

The approved budget, and the corresponding increases, were also done in advance of the city announcing in April it was going to hire new City Manager Taylour Tedder. The contract offered by commissioners to Tedder included a $250,000 annual salary, a $50,000 budget for moving expenses from Boulder City, Nev., and a home loan of $750,000 that will be forgiven in seven years if he stays the whole time.

Assistant City Manager Evan Miller, who was interim city manager during the budget talks, began the discussion by saying a tax rate of some kind needed to be passed during the meeting. It could be the current rate or the proposed rate, but one of them needs to be approved, he said.

Commissioner Don Preston asked Miller what would happen if the commissioners only approved the existing tax rate.

Miller said staff would come back in September or October with a budget amendment, when they had a better idea of the fiscal year’s finances. It’s so early into the fiscal year it’s hard to tell right now, he said.

Miller said auditors are currently reviewing last fiscal year’s figures, but staff is projecting a $1 million surplus in the general and water funds, and breaking even in the wastewater fund.

Tedder said revenues may be up, but costs are up too, especially for the beach patrol headquarters project because of unexpected delays when installing the pilings for the building’s foundation.

“You never know what’s under the ground until you start digging,” said Tedder, whose first day on the job was May 15.

Rehoboth’s city charter says the city cannot collect more than $3 million annually in property taxes.

Preston reminded everyone that the increase puts the city very close to that maximum. This is it, he said. It becomes a charter change issue after this, he said.

Commissioner Edward Chrzanowski said residents get a lot of services for the amount of taxes they pay, since every year the costs keep going up. This puts the city in line with neighboring towns, and is proportional to increases faced by the city’s visitors and businesses, he said.

Back in March, Commissioners Toni Sharp, Tim Bennett and Patrick Gossett all voted against the budget in large part because of the proposed increase to property taxes.

Gossett changed his mind. He said he had planned to vote no on the increase, but a number of neighbors and other constituents had contacted him saying the increase was fine with them.

Sharp and Bennett, both of whom chose to not run for re-election this year, again voted against the increase.

The increase will be reflected in the property tax bills the city will issue July 1.