If you’ve been hearing big numbers thrown around about Rehoboth Beach’s city budget and aren’t sure what to make of them, city officials want to clear things up.
Is the City of Rehoboth Beach financially healthy?
According to the city, the answer is yes — emphatically. Over the last 14 fiscal years, the day-to-day operating budget has grown at roughly 6% annually, a pace consistent with inflation, population growth, and the challenge of keeping skilled workers in a competitive coastal job market. The city currently holds $53 million in unrestricted reserves, which is $19 million above what its own financial policy requires.
What does the $50 million budget actually mean?
The total adopted budget for the current fiscal year comes to approximately $50 million. City officials say that number can be misleading because it combines three very different categories of spending that shouldn’t be treated as one lump sum.
The first category is day-to-day operating costs — things like employee salaries, services, supplies, and routine upkeep. Those expenses total about $29.9 million across all city departments this year.
The second category covers one-time capital projects, which are major infrastructure investments that occur in specific years and don’t repeat. For context, the city spent $26 million on the Ocean Outfall project in 2019, which pushed that year’s total budget to $48 million. A new City Hall cost between $8 and $9 million in 2017 and 2018. This year’s capital spending of $13.6 million is largely tied to required wastewater and water quality work.
The third category is debt service — paying off past infrastructure investments over time, similar to a mortgage. Annual debt payments have grown from $735,000 to $6.2 million, reflecting financing for City Hall, the outfall project, Beach Patrol facilities, and related projects. When those debt payments are separated out, the growth in actual operating spending looks even more modest.
Does Rehoboth Beach have a $12.5 million deficit?
No, according to city officials. The city says it is wrapping up the current fiscal year with a projected surplus of $1.5 million and has run surpluses for several years in a row. Current projections show surpluses continuing through at least 2031.
The $12.5 million deficit claim was attributed to a fellow commissioner who was quoted in the Cape Gazette. City officials say the figure appears to have been calculated by adding up the costs of potential future capital projects — items that have not been approved, funded, or formally proposed in any budget. That, they say, is not how a deficit is defined or measured.
Could the city fund those future projects?
Yes, over time and with careful planning, officials say. Each year, the Mayor and Commissioners — with public input — decide which projects to move forward, when to schedule them, and how to responsibly pay for them. No project is automatically approved simply because it appeared in a planning document.
Why does the city plan five years out if it only approves one year at a time?
Multi-year forecasting helps city leaders identify future needs early, avoid surprises, and make better decisions today. It is described as a planning tool, not a spending commitment. Residents have a say each year in what actually gets funded.
What should residents focus on?
Rather than debating a number that officials say doesn’t reflect the city’s true financial condition, residents are encouraged to weigh in on the questions that actually shape Rehoboth Beach’s future: Which infrastructure projects should be prioritized? How should the city use reserves that exceed its own requirements? What investments deliver the most value to residents? And how can the city maintain long-term financial stability while meeting community needs?
The city’s bottom line: Rehoboth Beach is on solid financial footing, the $50 million budget reflects planned investment rather than runaway spending, and the so-called $12.5 million deficit is not a deficit at all.
