Rehoboth considers property tax hike

by Michael Short on September 19, 2010

By Michael Short

Rehoboth Beach will consider the feasibility of a 25 percent increase in the town’s property tax rate.

The town commissioners decided to look at the possible hike after a long debate during the Friday, Sept. 17 commissioner’s meeting. There was no final decision made and no timetable for a final decision was set.

Rehoboth Beach is not in financially troubled waters. Commissioners said the city is well maintained and is not facing a financial crisis. But they also said there are future needs, like a new building for the city police, that must be met. In some cases, the city has put off spending for capital projects to save money.

The city also faces debts from projects like the boardwalk construction. The combination of future costs, current debt and the need for long-range financial planning were all cited by commissioners.

Commissioner Pat Coluzzi said the average property owner in Rehoboth pays perhaps $440 a year in property taxes. A 25 percent increase is expected to raise roughly $300,000 per year.

A modest crowd attended Friday night’s meeting. Commissioners were divided over the idea of raising taxes and worried that doing so in a down economy could hurt homeowners and businesses.

An email alert from the Rehoboth Beach-Dewey Beach Chamber of Commerce alerted businesses that the city would consider raising taxes. Gross receipts, accomodations and property taxes were all under potential consideration.

That prompted several letters from members of the business community. Most asked the commissioners to spread potential tax hikes across the board, instead of just targeting businesses.

Carol Everhart, chief executive officer of the chamber of commerce, said  most businesses want to know what the increase is for and whether it is really needed. If those questions are answered, “then they are willing to listen and have an open mind.”

“It is much easier to swallow when it is not just business,” she said.

Some worried that increasing the accomodations tax (already eight percent) would put Rehoboth Beach hotels at a disadvantage. “I don’t want to price the hotels out of competition with (those on) the highway,” said Commissioner Lorraine Zellers.

Commissioner Stan Mills said he checked other  towns to see what their hotel accomodations taxes were. All of the towns listed by Mills paid more than the eight percent rate paid by Rehoboth Beach hotels, including 13 percent in Virginia Beach and 15 percent in some New Jersey towns.

Commissioner Kathy McGuiness said that “clearly our taxes are low. People look  at that rate and they ask is that for a month?”

Commissioner Dennis Barbour said that he pays about $375 a year in taxes. He called it a “bargain” and said he wouldn’t mind having his taxes increased.

But Mayor Sam Co0per countered that most people had made less money this year. “It’s a bad, bad time when it’s (the economy) so uncertain,” he said.

“I know people in this town with reverse mortgages. We are not all wealthy,” Cooper said.

“A 25 percent increase is not unreasonable,” said Coluzzi.

“It’s a dinner,” said Drexel Davison of Bad Hair Day?.

“This just strikes me as the wrong time to raise taxes,” said Mills.

Barbour suggested raising the rental tax for individual property owners from three to five percent. The commissioners, however, decided not to pursue that option.

McGuiness said the city should look at all possibilities. For example, the $22 per year charge per hotel room, has not been changed in 18 years.

“Without planning, we’re liable to take on a big debt,” worried Mills. Mills said that long-range effective budget planning is needed. He said that if the city had put aside money each year to pay for boardwalk construction, then the city would have been prepared for the cost.

“We are holding our own. We are not in a financial crisis,” said Sargent. “My sense is that the people who elected me don’t want their taxes raised.”

“Nobody wants their taxes raised,” said Barbour.

{ 1 comment }

John September 19, 2010 at 6:04 pm

No reason a town like this needs this big an increase. this guy is like Coons who raised taxes twice in sussex Co. and now wants to go to DC to be a rubber stamp for Obama.I realize rehobeth is a lot of liberals so i hope you love your tax increases.

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