After members aired concerns over declining revenue and rising spending, Lewes City Council passed a budget late last week.
The budget predicts a drop in revenue of some 3.2% while spending is increasing by approximately 8.7%. Those trends caused some council members to push back on the draft budget. Councilman Joseph Elder, who serves on the city’s Finance Committee, noted that the committee sent council a zero-growth budget, but after that, it swelled by more than $1.6 million over last year’s budget.
“In the scheme of things, in a $13 million budget, that's a pretty big percentage, and that concerns me,” he said. “I think we need to be tightening our belts right now.”
In order to meet the demands of the draft budget, the city would need to dip into its reserve funds. The good news on that front is that the reserve fund is healthy. It currently holds over $7 million, enough to cover nine months of payroll, benefits, and other city operations.
Councilman Tim Ritzert also expressed concern about the spending increase, calling it “not sustainable.
“If we in fact have either a decrease in revenue, and that's what's been reported today, and yet our expenditures are increasing, that tells me that we need to do something to recalibrate our revenue to our expenditures,” he said.
According to City Manager Ellen Lorraine McCabe, much of the spending increase comes from “professional services,” like legal consultation and engineering and design on city construction projects.
On the revenue side, the budget does not raise property taxes. The only revenue source that will see a hike in the draft budget is parking meter fees, with a proposed 50 cents per hour increase.
But while taxes won’t go up in this budget, Elder contended that this year’s budget growth is part of a troubling trend that will eventually lead to higher tax bills.
“We've had increases every single year, and they haven't been small,” Elder contended. “Now we haven't raised taxes, but eventually we're going to have to raise taxes.”
Mayor Amy Marasco offers a compromise measure
Faced with discomfort from council members, Mayor Amy Marasco offered a compromise measure for consideration - pass the budget but revisit it after six months when revenue numbers are more clear. While Marasco noted that most communities need to periodically dip into reserve funds to meet their budget, she agreed it isn’t a road the city should be going down regularly.
“We do not want the continued pattern of this,” she said. “So we do an absolute budget revision at six months - see where we are, trends up or down - and then we can make decisions from there.”
Vice-Mayor Khalil Saliba, who initially advocated for a rethink of the budget with an across-the-board cut, seemed wary.
“It does seem to me that going back, it's almost like we're doing two budgets a year,” he said. “I'm not saying it's necessarily bad.”
In the six or seven months before the proposed budget review, Marasco had suggestions for things the city’s finance committee could look into.
“I'd want them to look at revenue - doesn't mean just property tax, could be other things as well,” she proposed. “Not to say that everything is increasing, but let's just look at what the options are.”
Marasco also wants the finance committee to look into a projection of staffing needs in the coming years and best practices on how much money the city should keep in its reserve fund.
Resiliency Fund prompts pushback from Elder
One sticking point in the budget proposal for Elder wass the city’s Resiliency Fund. That fund was created by City Council last April. The money in the fund is intended for projects that make the city better able to handle the effects of flooding and severe weather events. Recommendations for spending would come from Lewes’s Economic, Environment and Resiliency Commission.
The budget cuts appropriations for that fund this year in half, to around $200,000. But, Elder had concerns about locking that money away in a restricted fund before the groundwork for it had been finished.
“I don't like the fact that we're reserving it, that we can't really touch it, and I don't think all the work has been done,” Elder said.
That work includes a necessary charter change still in progress which will have to be approved by the General Assembly, as well as the establishment of bylaws for the EERC.
But, Saliba said, there are several bodies that make spending recommendations to City Council with bylaws, including a committee examining the city’s parking problems chaired by Elder. That sparked a brief disagreement between the two.
“The parking committee is not a commission,” Elder pointed out.
“You're playing semantics here,” Saliba retorted.
However, Ritzert appeared to assuage Elder’s concerns about the Resiliency Fund when he noted that the revenue feeding the fund isn’t due to appear for quite some time, giving council members ample time to make adjustments to the funding formula is necessary.
“The actual funds that are designated that create that fund, that's called ‘resiliency,’ those dollars are actually not available until like a year from now,” Ritzert said.
Council voted unanimously to pass the budget, with Marasco’s stipulation that they would undertake a complete review later in the year when the revenue picture is clarified.
Early next month, council members are set to vote on one specific part of the budget - how to apportion nearly $100,000 in grant funding for local organizations.
