South Bethany adopts 'bare-bones budget'

As concerns about municipal revenues continue to peak over a sluggish real estate market and proposed House Bill 111, South Bethany officials adopted on April 13 what Councilwoman Bonnie Lambertson called “a bare-bones budget.”

“The good news is we’re not raising taxes,” said Mayor Gary Jayne. “The bad news is we’re not raising taxes right away,” he added wryly.

“We’ve decided to hold the line,” Jayne continued, saying that the council would take a conservative approach to falling transfer tax revenues and hope that the real estate market would improve during the coming fiscal year.

But the council did not take the reduction in transfer tax revenues lightly, he emphasized. “This is an austere, no-frills type of budget,” he said, noting that the budget had been designed to keep the town’s reserves at a recommended level, despite the revenue fall-off.

Council Treasurer John Rubinsohn kicked off his budget analysis with the bad news: The town has gone from some $475,000 in transfer tax revenues two years ago to just $297,000 collected in the first 11 months of the 2007 fiscal year. That’s a drop of about $175,000 in revenue the town would rather have back in its coffers.

“We’ll run a deficit this year,” Rubinsohn warned, noting that some $116,000 in town expenses will be pulled from its reserves. While supporting the use of capital reserves from prior years’ transfer taxes for ongoing capital projects — such as the new town hall and police department — Rubinsohn seemed regretful that the reserves were hit so strongly in the 2007 and 2008 fiscal years, right as revenue dropped off.

“I hope we get more than the $300,000 we budgeted,” he said of transfer tax revenues. “If not, we will have reached the minimum level of reserves that is prudent,” he warned of the year’s end. “If things don’t improve, you can be pretty sure we’ll have a tax increase next year.”

Jayne looked on the bright side of that statement, saying, “I went in thinking we’d probably have to raise taxes (this year).” He said council members had seriously considered the potential impact of a property tax increase on the town’s citizens and had sought to avoid it. “It was a close call, but we decided to hold the line.”

Overall, Jayne said he felt the town was in “pretty good” financial shape.

Councilman John Fields emphasized that a potential property tax increase in the coming year would likely be a small one – just $50 to $75 per property for the year, if the council finds the need for any increase at all. That, he pointed out, was a long way from the doubled rate passed in neighboring Bethany Beach last month, even if that increase also only tallied in the hundreds of dollars for most property owners.

Lambertson heaped praise on the town’s financial staff and her fellow council members, saying that the homework they’d done on the budget had made a difficult process of cutting expenses much easier than it might have been.

In the context of the town’s budget, Jayne noted discussion from his recent attendance at a Sussex County Association of Towns (SCAT) meeting regarding House Bill 111, which proposes to pull transfer tax revenues from areas where the state has not supported additional development but where county or municipal officials have approved such.

Under the bill, those revenues would then be targeted at infrastructure improvements. But its impact is not yet clear and it has been met with fear and conflict when discussed in most of the towns inside Sussex County. Jayne said that fear was justified, even if the bill was primarily focused at the county government.

“If they take $9 million from the county, they will be hit hard,” he said. “And if you don’t think that would hit the towns, remember that the county gives us grants and pays for state troopers to patrol the area.”

It was a note of concern on the basis of the town’s self-declared “austere” budget and hopes for improvements in revenue in the coming year. The council passed their 2008-fiscal-year budget on a 6-0 vote, with Councilman Jay Headman absent.

In a related vote, the council also passed 6-0 a resolution adopting an 8 percent rental tax for the year. The council is required to adopt a new tax or vote to keep the old one each year. It has changed only incrementally over the years.

There have been concerns about whether the rental tax rate would drive away renters, who generally end up having the cost passed on to them by landlords. But Rubinsohn said he felt the town’s rental market was doing very well, with revenues consistently up about 5 percent each year. Jayne said there was also no evidence to support anecdotal statements that the number of rental units had been dropping.

Replenishment news a positive for the town

One bit of weight off council members’ minds as they tackled the trimmed-down budget was the recent news that the U.S. Army Corps of Engineers has fully funded the planned major beach reconstruction in South Bethany and Bethany Beach.

“I’ve never been so pleased with anything in my life,” Ronan said, praising a team effort and the work of Delaware Department of Natural Resources and Environmental Control’s Tony Pratt, who led the effort for federal funding along with the state’s legislators. “It was a hard battle and everybody should be proud,” he said.

Jayne noted that no easements had been required of property owners in South Bethany for the project to proceed, so that is one less hurdle toward getting the project started after Labor Day, as planned. He said just one easement remained to be obtained in neighboring Sandpiper Village, while a few others were recently reported as outstanding in Bethany Beach.

On the subject of the beaches, Fields asked why the town had some of its beach access via wooden steps and some via packed sand. Town Manager Mel Cusick said the variation had initially been in that some areas were intended for handicapped access, with no steps.

That situation will likely continue with beach reconstruction, as the town is required to have one Americans with Disabilities Act (ADA)-compliant access to the new beach. That will be near the center of Ocean Drive, as proposed. Other access points will likely mirror the reconstruction project in Fenwick Island, with packed-sand ramps leading over the dunes to the new 200-foot-wide beach.

Cusick noted that the town had stopped recent efforts to repair storm-damaged steps, pending last weekend’s nor’easter and potential additional damage. He praised the efforts of the town’s maintenance staff to reclaim some of the original cedar posts from the damaged stairs, as they had been washed up on beaches to the south.

“Replenishment is coming just in the nick of time,” Ronan opined. “Even a normal nor’easter gives us a terrible wallop.”

Windmills, dredging still on the radar

Jayne reported that the town’s canal dredge is still expected to take place this fall. He noted that the Assawoman Canal dredge might push that back toward winter, though, as the two projects cannot simultaneously use the same spoils pipe. While the larger project cannot continue after December, though, South Bethany is under no such constraint and could take place in January, he said.

Work is also proceeding on the proposed tidal pump project, Jayne said, with a final draft of the study of the town’s plan and potential costs for the project due to committee members this month.

Lambertson also addressed questions about the proposed wind farm off the area’s coast with continued skepticism on April 13, having not originally planned to speak on the subject. But she noted receipt by many local residents of a brochure opposing the project and favoring a coal-gasification electric-generation plant joining the existing coal-fired power plant at Indian River.

The councilwoman said she remained concerned about the realism of depictions of the proposed Bluewater Wind wind farm, after photo-visualizations of the project had been made available in town hall for a week. (Those print-outs, to ideally be viewed at 10 inches from the page, are now at Bethany Beach Town Hall.) “Two hundred windmills are not going to look like little fuzzy sticks,” she predicted.

Lambertson said she also desired guarantees that the power generated off the Delaware shore would be used to supply area residents and help reduce the toxic output generated by the Indian River plant. She also again questioned how safe the project would be in the case of a severe storm.

Resident Therese Keane said she’d received the brochure from the union but was also skeptical of the union’s close ties to NRG, which owns the Indian River power plant, as well as the potential conflict presented by Delmarva Power’s ties with Conectiv, the third bidder for a new power supply source. Ronan said he was personally concerned about whether the coal gasification process was truly safe for the environment over the long term.

Jayne, though, said he felt the decision on the issue was now in the hands of Delmarva Power and the Public Service Commission, with it appearing likely that none of the three existing proposals would be accepted.