Cape May Budget Lingers

CAPE MAY – While some municipalities have adopted their 2020 budgets, Cape May City Council postponed a vote to adopt its budget April 7. The council held a special meeting April 14, where the consensus was that uncertainty about revenues made continued delay necessary.
City Manager Jerry Inderwies said that City Council would be asked to expand the temporary budget to allow the city to meet its obligations while discussion of reductions to the budget progress. The total budget under consideration is $32.2 million, of which $20.6 million is for general operations and the rest is spread across three utilities. 
Cape May‘s $20.6 million operating budget calls for only 51% of the revenue to come from local purpose taxes. The remainder of the budget is heavily dependent on the yearly influx of tourists and second homeowners. 
At the special meeting, Chief Financial Officer Neil Young said that the city can already count as lost $600,000 in revenues. The amount of projected revenue at risk increases, as the city continues to move into portions of the year when tourism activity normally rises.
“If we lose the whole second quarter, things will get even more serious,” Young said.
At the April 7 meeting, the governing body was urged to identify potential cuts before adopting the budget. City Auditor Leon Costello said if the city adopts the budget and defers canceling expected expenditures until later, “you run the risk that you might not be able to get them out.”
The Taxpayers Association of Cape May submitted a letter, calling for the city to “establish a budget priority of reductions, limitations and terminations to secure 2020 and 2021.” Young pointed to projected declines in occupancy tax revenue, parking meter fees, beach tag sales and lower interest on investments. He also noted that water use was down by 2.5 million gallons in the first quarter, leading to concerns that a continued decline in use would lead to lower revenue realized by the water and sewer utility.
For Cape May this year, the 2020 budget problems are magnified by on-going controversies surrounding several high-profile projects. The city recently sealed a partnership with the county and the Library Commission, for a total $6 million to renovate and repurpose the historic Franklin Street School, as a community center and branch of the county library system.
A report from an advisory committee on the location of a new public safety building has faced opposition causing a $15-million bond issue to fail to pass on multiple occasions.
A request by a local non-profit organization for city financial support of its long-standing litigation aimed at preserving a 100-acre tract of wetlands, in the east end, has met with enough opposition that the resolution to contribute city funds has repeatedly failed to pass.
A fire at the Allen African Methodist Episcopal Church, on Franklin Street, has left the property in need of renovation and repairs that exceed the congregation’s ability to finance. 
The city has been engaged in engineering and environmental studies that are preliminary to a potential municipal purchase, another expense that requires a new review.
The city’s engineering firm presented a plan for managing the municipality’s water supply, especially its aging desalination plant, once an innovative solution to the need for potable water at the cape and now, 20 years later, an innovative solution needing substantial new investment. The plan submitted to the council calls for an investment of $29 million in the next decade, with almost half called for in the next four years.
Inderwies told the council that the city has until June 2 to adopt a budget, given the state’s extension of the deadline. Young advised that the time may be needed “to see how this is going to play out.”
Council members were urged to get suggestions for expenditure reductions to Inderwies and Young as soon as possible. The special meeting did not get into discussing specific spending cuts. 
To contact Vince Conti, email cvonti@cmcherald.com.