Members of Bethany Beach’s Budget and Finance Committee met briefly Friday, March 18, to complete final review and markup on the town’s $10.2 million budget for its 2006 fiscal year.
Last-minute changes were largely constrained to accounting for the impact of previous changes:
• $250,000 in additional revenue from the proposed 3-percent building impact fee;
• $473,000 to service the debt on the former Neff property;
• $135,000 for capital improvements, related to finishing informational displays and other work at the former Natter property, which is to become a nature conservation and education center;
• approximately $3,000 to replace the cell phones used by town staff with Blackberry units capable of phone, e-mail and text communication; and
• $1.3 million in estimated real estate transfer tax revenue, increased from the original $1 million estimate and predicted to be closer to the ever-increasing annual figure.
Town Manager Cliff Graviet, in presenting the changes, noted that the town had in the previous week engaged in a discussion with the Neff family. That discussion was the result of a suggestion from Finance Director Janet Connery that the town pay off the entire debt on the property in the coming fiscal year.
The move would have potentially saved the town $95,000, even with a $30,000 pre-payment penalty. Committee members had previously voiced their support for paying off the debt in anticipation of the savings.
Graviet said the Neffs had expressed some concerns about the financial impact of that decision on the family, prompting the town to continue work on a pre-payment schedule both parties would find acceptable, including possibly paying the entire total due in the next calendar year. Discussing the efforts to work with her, Graviet praised the former property owner as having been a “good citizen in working with the town.”
The committee’s efforts toward a building impact fee were also refined at the March 18 meeting.
Graviet and Building Inspector John Eckrich presented the committee with a standard for computing construction costs in relation to the impact fee. The standard comes from the International Code Council (ICC), which is also responsible for the international building code adopted recently by the town and the international maintenance code currently under consideration by the Charter and Ordinance Review Committee (CORC).
Under the current ICC standard, the cost of residential construction in the town would be calculated at a flat $84.71 per square foot of enclosed space. That cost would then be assessed at 3 percent of the total as the new building impact fee, including permits.
Graviet noted that he and Eckrich had examined a series of standards before selecting the ICC standard to recommend to the committee. The other standards had been rejected as far too complex to be practical for the use.
While some previous committee discussion had mentioned the notion of assessing higher impact fees for more lavish construction, committee members did not object to the single, flat rate when it was presented, instead championing the simplicity of the standard.
After the conclusion of the meeting, town Secretary/Treasurer and Committee Chairman Tony McClenny said committee members had opted to aim their assessment at the far more common high-end construction rather than targeting the rare exception of simpler, less lavish homes. He reiterated Graviet’s emphasis on the simplicity of the resulting calculation.
Also in an effort to maintain that simplicity, committee members agreed to follow the code’s definition of assessed “living space” as any enclosed space, including storage areas. Those issues ironed out, the committee members voted unanimously to accept the standard and the amended budget.
McClenny praised the committee members and others for their assistance in finalizing the draft budget. The committee then adjourned to co-host a public hearing on the budget with the town council.
During the hearing, McClenny again noted that the bulk of the town’s revenue comes from transfer taxes, real estate rental taxes and property taxes.
He said the town is in good financial shape and has spent much of its funds in recent years in pursuit of goals such as open space, improved drainage, environmental and beautification efforts, and efforts aimed at improving the quality of life.
Despite a moderate turnout for the hearing, questions about the budget were confined to a series of brief inquiries about a few detailed elements of the proposal, as well as the philosophy of including depreciation costs as a way of paying for anticipated maintenance and improvements to town property, such as its water system.
Discourse on the proposed 2006 fiscal year budget was similarly restrained at the town council meeting later that evening. Council members simply voted unanimously to accept the budget, with Harold Steele and Bob Degen absent from the meeting.
Budget and Finance Committee member Don Doyle took the opportunity to praise McClenny for his work as chairman of the committee, and thus the work of the committee for this year’s budgeting process was complete.
The fiscal year begins April 1, including enactment of all changes in the town’s fines and fees. The total amount budgeted in both revenue and expenditures is approximately $10.2 million, including $5 million in projected cash and investments held at the start of the fiscal year.
The budget differs slightly from previous years’ budgets in that it specifically delineates reserves for emergency purposes ($250,000), beach and boardwalk needs ($753,000), upcoming sanitation department capital needs ($550,000), and unfunded contingencies ($200,000). Previously, such reserves were budgeted but not specifically set aside in the budget.
General funds in the 2006 fiscal year operating budget are broken down into the following amounts by department or use:
• Administration — $901,000;
• Police — $993,800;
• Parking — $256,700;
• Alderman Court — $40,600;
• Beach patrol — $322,700;
• Streets and alleys — $601,700;
• Stormwater management — $205,900;
• Beach, boardwalk and comfort station — $238,600;
• Sanitation — $437,000;
• Building official — $196,300;
• Bandstand and entertainment — $101,700; and
• Historical Association — $6,200.
The capital budget includes the following figures:
• Administration — $968,400;
• Police — $58,800;
• Parking — $54,800;
• Streets and alleys — $275,000;
• Stormwater management — $300,000;
• Beach, boardwalk and comfort station — $388,400; and
• Sanitation — $69,700.
The town’s water department exists as a fiscally separate entity, with a total budget of $1.6 million in the 2006 fiscal year ($580,000 from cash and investments at the start of the fiscal year, $766,400 from operating revenue in the budget and $300,000 from impact fee revenue).
With no aim to actually draw positive revenue, the department is also expected to expend $1.6 million in the coming year ($674,000 in the operating budget, $152,200 in the capital budget, $502,200 for capital projects remaining and budgeted in prior fiscal years, and $318,000 for contingency needs, future projects and cash on hand).
The budget also includes $318,000 that was budgeted in the sinking fund for the town’s water system ($100,000 was held in cash or investments at the year’s start), while $385,000 is to go into the debt service budget and $32,200 reserved for future debt service.