Virus takes toll on town budgets: ‘We have to be careful’

A minivan travels west on Camden-Wyoming Road in Wyoming on Thursday. Delaware State News/Marc Clery

HARRINGTON — Municipal budgets are taking widespread hits as revenue streams evaporate due to COVID-19’s grip on society.

In Delaware’s beach towns, greatly diminished rental property taxes and parking fees are likely as tourist season nears.

Downstate police departments report far fewer traffic stops, lessening revenue from tickets, fines and violations.

Real estate transfer taxes have fallen as the market slows, building permits are limited and staff positions remain unfilled.

Towns with budgets approved pre-coronavirus anticipate special meetings to evaluate where the finances stand now.

Others are early in the process toward starting a new fiscal year on July 1 and evaluating every cent.

And there’s no end in sight for the pandemic, so its impact may grow far worse.

Wyoming officials begin the budget process next week and Vice Mayor Doug Denison said “We’re going to have to be cautious, very steady handed so we have room later on when we see just how significant the fallout is.”

A new budget must be in place by July 1. The FY 2020 budget was approximately $1.1 million but constructed in less strenuous times.
The town of around 1,500 residents doesn’t have “a lot of resources for financial forecasting,” and Mr. Denison said special sessions may be held later to adjust to the reality of what money is available.

Less tickets, more safety

Police won’t overlook reckless motorists endangering the safety of all, but stops have fallen drastically. There’s far less traffic as travel restrictions continue, and officers are making less close contacts to cut the odds of infecting or being infected.

Wyoming police wrote 60 to 70 traffic tickets combined in January through March, but none in the first 3 1/2 weeks of April, Chief Martin Willey reported at a recent council meeting.

“We don’t make an extreme amount of money from ticketing, it is a component of our revenue stream,” Mr. Denison said, noting that the fines are used to offset law enforcement expenses.

“We do know that the numbers are way down.”

There’s apparently little to cut within the police department, which has an authorized strength of four officers but currently employs two.

“That presents challenges in itself from the enforcement perspective,” Mr. Denison said.

Vehicle stops in Harrington — where U.S. 13 cuts through town limits — have dropped “quite a bit,” though Police Chief Norman Barlow didn’t immediately have exact figures last week. He said speeding stops account for the largest decline and are “made at the officer’s discretion.”

In Felton, traffic violations decreased 68% in April compared to a year ago, and fell 40% in March. Smyrna officers filed 176 traffic charges in April 2019, compared to 14 this year.

Paying the bills

Early this week, Milford had just less than 1,100 delinquent utility accounts owing around $230,000. Some were entering the second month of being behind, interim City Manager Mark Whitfield said.

In the past, the city had seen about 5% to 6% delinquency rates. Based on the 7,500 accounts now, that has ballooned to around 14%.

To meet the surge, city officials are working on a three- to six-month payment plan schedule to catch up. Fortunately, power bills are typically smaller at this time of year due to mild temperatures, Mr. Whitfield said. If significant challenges remain when hotter weather arrives in June, he said the stress will be exacerbated.

“We’re not looking at charging any interest as long as people are paying it off in some way,” Mr. Whitfield said.

Smyrna’s outstanding utility accounts have escalated too and a committee plans to review possible payment arrangements and utility disconnect policies. In an effort to assist customers, the town said electric/water/sewer rates were reduced through July.

“We are currently not applying late fees or performing utility disconnects for non-payment,” interim Town Manager Gary Stulir said. “We have been monitoring our outstanding balances. Most customers have continued to pay their utility bills.”

After a two-year boom in housing starts and associated real estate transfer taxes generating about $1 million annually, Milford has dropped that estimate to $900,000 for the FY 2021 budget. Houses under contract in April dropped precipitously compared to March, Mr. Whitfield said.

Transfer tax revenue is split to pay for police officers and capital improvements. If staff vacancies occur, decisions to fill them won’t come easily, Mr. Whitfield said. Projects such as street paving could be delayed as well.

“We are scouring the budget to evaluate every possible expense,” Mr. Whitfield said.

And they are looking at worse-case situations that could arise from the COVID-19 pandemic.

“We keeping an eye on the pulse of the poultry industry,” Mr. Whitfield said, noting that Milford’s finances may be affected if Perdue Farms struggles. The company accounts for about 35% of the city’s electricity and wastewater services.

On the bright side, Mr. Whitfield said, “Most developers feel that once the state of emergency is lifted things will pick up where they left off.

“That remains to be seen but we’re certainly keeping an eye on it.”

Will meet again

As the coronavirus spread was gaining early momentum, Lewes adopted its nearly $6.4 million budget on March 13 while acknowledging a
need to revisit it this summer as COVID-19’s effects became clearer.

“Beach parking lots provide a significant bulk of revenue and they’re not open because the beaches aren’t open,” City Manager Ann
Marie Townshend said.

The previous year’s budget was around $6.3 million.

Currently, officials have budgeted $725,000 for anticipated parking meter revenue and $230,000 in parking fines. While no meters are currently activated, Ms. Townshend said, “we are preparing to make meters operational by the end of the month.”

While vacation home rental tax was anticipated to be $550,000, “that will end up being significantly lower,” she said.

In April 2019, Lewes received about $22,000 in building permit fees. That dropped to roughly $16,000 last month.

“The biggest difference between this and prior challenges such as the Great Recession is that we’re in the middle of it now and don’t know what the ultimate effect will be,” Ms. Townshend.

As in many other municipalities Downstate, a number of Lewes capital projects are on hold, and staff positions remain vacant. The city has been without a town clerk since March and won’t advertise the opening until at least June, Ms. Townshend said.

Half the tourists?

In the next town south, Rehoboth Beach may see general tourism numbers drop between 30% to 50% during the critical 100-day stretch from June to August.

“Tourism is what makes the world go round here and the numbers are likely going to be pretty bad,” Mayor Paul Kuhns said. “It’s a critical time for the city budget, just like every business and municipality I suspect.”

The city passed a $17 million operating budget on April 1. About half the operating budget is derived from projected parking revenues, rental and accommodation taxes now in extreme peril. The overall revenue projection (including water and sewer) was around $25.9 million for FY 2021; it was $24.3 million for FY 2020.

“(This year’s) was created based on the information we had at that point in time,” Mayor Kuhns said. “Today we know a lot less than we’ll know on June 1 and on June 1 we’ll know a lot less than we’ll know on July 1.”

Helpful Coronavirus links

Delaware Division of Health Coronavirus Page
CDC: About the Coronavirus Disease 2019
CDC: What to do if You Are Sick
Johns Hopkins Coronavirus Resource Center
AP News Coronavirus Coverage
Reopening Delaware: Resources for Businesses
Delaware Phase 2 guidance

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