DRAFT Minutes April 7, 2012DRAFTApril 9, 2012
Town Of Dewey Beach, DE
Budget & Finance Committee
Draft Meeting Minutes April 7, 2012
Call to Order by Chair David King (10:05 am). Roll Call: Mark Allen, David Jasinski, and Larry Silver were present, and Dave Davis participated via Skype. Director of Finance Bill Brown and Code Enforcement Official Bill Mears participated their official capacities; also present were Commissioners Anna Legates and Jim Laird, and members of the public, John Snow, Gary Keith, and Garland Williams.
Purpose: Review of February 2012 and FY12 Year-to-Date financial performance, and discussions related to reliable and predictable revenue streams for FY14 and beyond.
Approval of minutes. A motion was made to approve the draft minutes for the March 3, 2012 Budget & Finance Committee Meeting, which was seconded and passed by unanimous voice vote.
Financial Reports
Revenue & Expenditures
For the Month of February 2012
Revenues of $198K; $84K better than budget, largely due to Transfer Tax, Accommodations Tax, and Business License revenues, some of which is likely due to timing issues
Expenses of $165K; $$25K worse than budget, largely due to professional fees related to mold remediation
For the year to date
Total revenues of $2.93M; $$527K better than budget, largely due to excess Transfer Tax, Business License fee, parking fine, and DNREC loan revenues.
Total expenditures of $2.899M; $586K worse than budget, largely due to Bayard drainage project costs, and regular legal fees.
Net revenues in excess of expenditures currently $60K worse than budget as of February 29, 2012.
Balance Sheet
Total net assets of $1.194M (including $266K in the committed legal-litigation account)
Topics related to a Dependable and Predictable Revenue Streams
General Fund reserve. There was a committee consensus for achieving an uncommitted reserve in the Generral Fund of one-year’s operating expenses – approximately $2.5M – over the time period of 10 years. The uncommitted General Fund reserve is approx. $900K.
Infrastructure and Capital Expenditure accounts. Pending more accurate estimates of pending and anticipated capital expenditure needs and priorities (to be provided by the Infrastructure Committee and the new Town Manager), there was a consensus on a target of $3M total for infrastructure and capital expenditures, to be set aside over the next 10 years. The Restricted Infrastructure account stands at approx. $250K.
To achieve these combined goals, set for the long-term viability of the town – to protect and maintain its infrastructure and capital assets – will require establishing predictable streams about $450K per year of predictable, incremental revenue.
Tax on H/Motel Accommodations. Mark Allen and Dave Davis briefed the committee on why this is not an option in the near term (see Attachments). The state reserves this authority for itself and communities with more than 50,000 residents. For Dewey to institute a h/motel accommodations tax would require unprecedented action by the DE General Assembly.
Gross Receipts Tax. David Jasinski reported on discussions he had with state revenue officers, that Dover would never grant Dewey the authority to impose a gross receipts tax.
Reassessment of business license fees. Mark Allen and Dave Davis will pursue an aggressive timeline to work with the various stakeholders to propose a comprehensive and fair fee schedule for all business licenses. Given the sensitivity regarding what can be covered within a license fee, David King will seek guidance from the Town’s legal counsel.
Sponsor a Lifeguard Stand. Garland Williams and Gary Keith from the Marketing Committee briefed the committee on the progress on the sponsor a lifeguard stand program. Sponsorships will be awarded on a first come basis in 2012 and are expected to raise approx. $14K - $15K after expenses.
Meter placements and upgrades. Council is expected to approve procurement of smart meters to add some 102 metered spaces in the RB1 district. These new, and smart meter upgrades are projected to generate +$50K to +$100K per year incremental revenue starting in 2012.
Extension of residential rental accommodation tax to all residential rentals. Following discussion regarding possibly excluding certain leaseholders from this tax, there was a motion, seconded and passed by unanimous voice vote, in the interests of fairness to recommend to Council that the residential accommodation tax be extended to encompass all lease holders. This is projected to generate $5K to $10K in new revenue.
Adjustment of business license fees for larger (>100 based on 2011 occupancy) food- and beverage-serving establishments. Jim Laird briefed the committee on progress in getting buy-in from the major stakeholders in this group of businessmen for an increase in the occupancy multiplier to $12 from $6. This will generate $45K of incremental starting in 2012, nearly doubling, to slightly over $100K, the aggregate license fees paid by the 24 ABCC-licensed establishments in town.
Property Tax or Town-Service Fee. This leaves a gap between targeted- and projected-new revenue of approx. $350K per year. Discussion focused on bridging this gap by instituting either a property tax or a town-services fee. While there was consensus that the target $350K/year raised by this tax/fee should be dedicated to a) funding infrastructure and capital expenditure accounts, and b) building the reserve, there was consensus that, as a reliable, predictable revenue stream, this new revenue stream should be used to fund operations. And that, along with any ordinance/resolution to implement such a tax/fee, there should be companion legislation to dedicate all—or at least a majority—transfer tax and building permit revenues to building these capital asset and reserve accounts. Pros and cons of such a tax or fee were discussed. The major con with a property tax is the (potential, historic) resistance to such a tax; the major con of a fee is how to fairly base such a fee.
Following a brief discussion of user pays/fair sharing of town costs, there was a general feeling that any new infrastructure tax/fee on residential property owners might need to be balanced by a companion tax/fee on business property owners/operators.
David King set the goal of a recommendation/set of recommendations to Council to come out of the May B&F meeting. Toward this end, he tasked the committee members with providing him their input and individual recommendations on:
- pros and cons of a tax or fee,
- an appropriate basis and range of rate for any such tax(es) and/or fee(s), and
- triggers and sunset conditions
by the end of the week (April 14h). He will then establish a general framework for fostering discussion at the next meeting and recommendation to Council.
Adjournment. There was a motion to adjourn; seconded and passed by unanimous voice vote (12:10 pm). The next Committee meeting is scheduled for May 5, 2012 at 4:00 pm.
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