Apartment complex sales counteract projected shortfall, city staff say
Tensions eased last week among members of the Dover City Council with news that a significant budget shortfall has been averted for the time being.
City Manager Tony DePrima told council Nov. 22 that revenues from real estate transfer taxes are now tracking above their budgeted level, thanks to a six-figure windfall resulting from the sale of three Dover apartment complexes.
In October, city finance staff reported that, because of the stagnant real estate market, transfer tax revenues had fallen $350,000 short of their $1 million target for the first quarter of the fiscal year.
The news sparked debate among council members, which resulted in a motion directing DePrima to compile a list of budget cuts that could be made immediately to cover the shortfall.
Those cuts were supposed to be presented to council’s Legislative, Finance and Administration Committee Nov. 22, but DePrima came bearing good news instead.
“We learned that we had a very large transfer tax come in,” he said. “It really negated the whole reason why we were here.”
DePrima said he received a letter from the state Nov. 19 indicating the city would be receiving a transfer tax payment in the amount of $647,000 resulting from the sale of the Woodcrest apartments off Walker Road, the Country Village apartments off South Little Creek Road and the Mapleton Square apartment complex on Willis Road.
That payment negates the shortfall and puts transfer tax revenues in the black by nearly $300,000.
DePrima said the large payment should have been received earlier, but because of an error during the settlement process the check went to Kent County Levy Court, which cashed it. Realizing the error, the county sent the money to the state government, which passed it along to the city.
However, DePrima also told the finance committee what budget cuts he and other city officials were considering putting forward when the transfer tax revenue was still in doubt.
Some of the money, DePrima said, could have been found in other budget lines that, to date, have beaten their targets. For example, the city saved $106,000 in the first quarter on vehicle purchases that came in under budget, he reported.
Savings from attrition also are tracking some $16,600 above the $184,000 budgeted to account for employees who retire, quit or are let go.
As for cuts, DePrima said he could shave roughly $52,000 from the budget by freezing spending for non-essential training and postponing capital projects including construction of a new city skate park, installation of additional security cameras downtown and replacement of aging computer equipment.
But, savings and minor cuts would only amount to roughly $190,000. If the $350,000 shortfall had held, DePrima said council would have had to make some tough choices to cover the remaining gap.
The city manager offered four budget scenarios that would save $150,000 each.
To reach that dollar figure, the city could layoff six employees, furlough all non-union workers for 12 days or cut the annual street-paving budget in half.
Email Doug Denison at email@example.com