Wednesday, March 18, in a special budget workshop – the final of three such workshops – the South Bethany Town Council examined the town’s finances and discussed the necessity of increasing property taxes from $0.65 to $1.65 per $100 of assessed value for the upcoming fiscal year. The 154 percent jump in property taxes passed on a 3-2 majority vote at the previous budget workshop. It would be the town’s first property tax increase in 33 years.
The increase comes as a result of decreased revenue in recent years from real estate transfer taxes.
In the budget meeting, the council members and town staff addressed actions that have already been taken in an attempt to accommodate the drop in revenue, including cutting town expenditures, postponing major purchases and non-essential projects, raising town fees (such as building permits, mercantile licenses and parking permits, and adding town-conducted beach vending.
In addition to those cuts, the town needed to seek additional revenue. Transfer taxes had served as the town’s main source of income for more than a decade but have fallen drastically as a result of the struggling real estate market. Mayor Gary Jayne noted Wednesday that he considers the predicament “inescapable.” He said property taxes have become the only source of revenue left to tap.
Councilman John Fields voiced his opinion against the increase this week, recommending the council another look at budget cuts.
“Last winter, in 2008,” he said, “the average homeowner paid $206 in taxes. This spring, that person will pay $524, which is a significant change. When taxes jump that much, it’s a lot for one year, especially when you consider that they have not been raised in 33 years.”
The council agreed Wednesday to hold quarterly budget reviews this year to examine the situation and follow their financial progress.
Jayne assembled a draft letter to homeowners, assuring them that the town is not currently in debt and possesses the reserves recommended by the town auditor. In addition, Jayne made note that every effort will be made to reduce property taxes again once the real estate market improves.
The town will discuss the matter further at the next regular town council meeting, scheduled for 7 p.m. on April 9 at the town hall, before considering adoption of the 2010 budget, including the increased property tax.