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Feb 17, 2019
The Board of Commissioners are underway with budget meetings and are discussing two potential changes in revenue for the upcoming fiscal year. The changes include an increase in property tax from $0.04 to $0.06 per every $100 of assessed value and a 3% public accommodations tax on hotels, motels, and tourist homes.
The last change to the City’s property tax occurred in 2014 when the tax was lowered from $1.78 to $0.04 per every $100 of assessed value. The decrease in property tax was used to keep taxes neutral since an increase in property values was expected from the reassessment. As a result, in the two years following the change, the City saw a decrease in property tax revenue. The amount that homeowners pay in property taxes depends on their property’s value. Based on FY 2017-18 property tax revenue, the average taxpayer pays roughly $500 per year. The proposed new tax would increase this amount by roughly $20 per month, depending on the value of your property.
The State of Delaware currently collects a public accommodations tax of 8% on hotels, motels, and tourist homes. The proceeds of this tax are distributed as follows:
5% to the State General Fund
1% to the Beach Preservation Program of the Department of Natural Resources and Environmental Control of the State
1% annually to the convention and visitor’s bureau in each County (Chamber of Commerce)
1% to the Delaware Tourism Office
If the Board of Commissioners votes to do so, the City of Rehoboth Beach will submit a charter change to the General Assembly during the current legislative session for the accommodations tax. This change mirrors State law and would authorize the City to enact and collect a public accommodations tax of no more than 3%. The 3% charged by the City of Rehoboth Beach would be in addition to the State’s existing 8%, for a total of 11%. The public accommodations tax is primarily paid by visitors, which reduces the tax burden on our residents. Out-of-town visitors depend on our police service, roads, infrastructure, and other City services while they’re here, and a public accommodations tax would more equitably distribute service and infrastructure costs generated by the City to all who use them. These tax increases are necessary to keep the City’s revenue steady and to maintain funding for essential City services. The cost of the services we provide to our residents, businesses and visitors increase every year. The proposed tax revenues will be allocated to the General Fund, which is the City’s primary operating budget that supports public safety, lifeguards, public works, solid waste, recreation, tourism, general government, and debt service. General Fund supported services include things such as police officers, lifeguards, beach cleaning, trash pick-up, boardwalk maintenance, and infrastructure maintenance. The General Fund also supports most of the City’s Capital Budget, which in FY 2020 includes projects such as boardwalk restroom rehabs, boardwalk foot shower conversions to shower towers, storm drain improvements along Wilmington Avenue, replacement vehicles for the police department, street paving, necessary improvements at our Streets Department facility, Phase II of Lake Avenue streetscape, and a replacement trash truck.
The City’s fiscal year begins April 1, 2019, and the Board of Commissioners will approve the final budget and tax rates at the March 15, 2019 meeting. The meetings can be live streamed by clicking on the video button above each commissioner meeting or by navigating to youtube.com/c/rehobothbeach.
