South Bethany reconsiders proposed tax hike

A strong showing of 67 concerned residents arrived at South Bethany Town Hall last Thursday evening, April 9, to approach the council with their unease about the proposed 154 percent property tax increase planned for the 2010 fiscal year.

Property owners and residents weighed in at the council meeting, addressing the five-person council, minus an absent Mayor Gary Jayne, and urging a reassessment of the town’s budget. Ultimately, the council moved to review the budget again and table their resolution to act upon the tax increase to a later date.

“We’ve had three budget workshops,” said Deputy Mayor and presiding officer Marge Gassinger. “And we’ve gone line by line through the budget. It’s in the interest of this council that we take another look. We need to go back to the drawing board.”

The proposal to increase property taxes came by way of a majority vote during the council’s budget meetings in previous months. The 154 percent increase would raise property taxes from 65 cents per $100 of assessed value to $1.65. Jayne made note at previous meetings that transfer taxes – the town’s primary source of revenue in the past – had not been coming in as they had been in years past, due to the decline in the housing market, and a property tax increase would be the town’s only viable option.

Anxious property owners shared their opinions last Friday, many noting that while a tax increase might be the practical solution, one of the proposed size was simply unheard of.

“I have been in the real estate development business for 35 years, up and down the East Coast,” said Frank Spingler, “and I have never seen an increase of this magnitude even discussed before. To say we are shocked is an understatement.”

(It should be noted that Bethany Beach increased its property taxes by 100 percent in 2007, doubling them from 8 cents per $100 of assessed value to 16 cents per $100. Last month, it raised the rate a further half-cent, to 16.5 cents per $100.)

“I have suggested in e-mails to the council that they consider a special assessment,” Spingler continued. “If you look at history, taxes almost never go down. If you presented a special assessment of an increase, I would be willing to pay what you are asking over two or three years, equal to what this increase is, and I would hope that in that period, [the council] could get control of the budget.”

The council made note last Friday that every avenue had been examined, from consideration of raising rental taxes to increasing fees and mercantile permits throughout town. One of the objections by the majority of property owners was over the proposed salary increase for town employees, which included a 2.5 percent step increase and a cost-of-living increase, accounting for 10 percent of the proposed property tax hike.

While many of the property owners in the town of South Bethany are retired, others are struggling more to make ends meet.

“If the proposed increase is supposed to cover this year’s shortage and build back last year’s reserves,” noted Sandi Roberts – a wife, mother and school teacher living with her family in the town – “I have a problem with that. When my husband lost his job, we were forced to dip into our reserves. Now that he has a job back, we’re not replenishing those reserves. We’re just trying to get by on what we can, and that’s what the council needs to do.

“Second, I don’t question how hard-working our town employees are, but I’m a really hard-working teacher. The governor said to me that, because of the extreme situations, all state employees – including teachers – are not only not getting a cost-of-living increase, but will take an 8 percent pay cut. [While that proposal is not finalized,] what has gone through is that the state is reducing the amount they’re paying for our health insurance.

“I believe this [tax increase] is an extreme situation for South Bethany homeowners, and people are suffering. I have a problem with my taxes going up to support a pay increase for town employees.”

Other property owners discussed the necessity of planning ahead and establishing a long-range budget.

“I’ve talked to other towns’ [representatives],” agreed Councilman Jay Headman, “and they have said it’s very valuable to have two-, three- to five-year projections. We need to do it. We can’t be perfect with projections, but this town needs to see where our costs are going to be down the road.”

Others discussed the need to have the proposed budget more readily available to citizens, such as allowing them to access it online.

According to the town’s financial advisor, Renee McDorman, funds in the town’s reserves have already been considered.

“We have $800,000 in our reserve,” she said, noting that that money is necessary for the budget. “The town can survive without revenue for six months on that $800,000. We had anticipated another $50,000 in transfer taxes, but we’ve received none in four months.”

According to resident Rose Walker, who has devoted years to the real estate business, the budget shortfall should not have been a surprise.

“I have been giving the town up-to-date numbers on real estate sales,” she said, “for several years now. I don’t know why the town was surprised by the lack of transfer taxes coming into the budget. We depend on real estate sales, extremely. It’s obvious. We also depend on real estate rental tax. If you raise those, investors will stop investing in this area because the renters won’t rent. We counted on something that should have been used for excess and special budget items, not something to keep the budget in line. I told people you cannot rely on transfer taxes alone. That market has been struggling since 2005.”

The Town of South Bethany plans to hold a special meeting/workshop on Tuesday, April 21, at 10 a.m. at the Town Hall, located at 402 Evergreen Street, to discuss a resolution to continue town operations without the adoption of the 2010 budget, in efforts to resolve the situation with the proposed tax increase.

The council also made a recommendation to schedule an additional meeting to re-examine the budget prior to the scheduled May 8 council meeting. The public will again have the opportunity to voice their concerns at the regularly scheduled council meeting on May 8 at 7 p.m.

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