Sea Isle City Cost Allocations – Accounting Chicanery?

SEA ISLE CITY — Whenever a city charges fees for a service, one of its responsibilities is to properly determine the costs for that service. Sea Isle City has made some improvements in their procedures; however, their recent fee setting workshop shows some significant inconsistencies that may have a direct effect on SIC taxpayers.
Inconsistencies in allocations of employee costs to water & sewer vis-à-vis beach, marina and other services remain a problem. In many instances, employees perform work directly or indirectly for these services.
For example, our Chief Financial Officer expends effort to maintain accounting controls over beach tag fee collections and bank deposits, so some portion of her pay and benefit costs should be allocated to the beach. The figures below shows how very inconsistent their approach on these items remains.
Sea Isle City Cost Service Allocations
Department Water & Sewer Beach Marina
Administration 25% *** 0%
Mayor & Council 25% *** 0%
Municipal Clerk 15% *** 0%
Municipal Engineer 40% *** 0%
Finance 36% *** 0%
Police 2% *** 0%
Public Works – Administration 50% *** 0%
Public Works – Road Repair, Street Cleaning, Building & Grounds
5% *** 0%
***City allocated a bulk $25,000 for these and other expenses without any detail
We could also extend the discussion to services like rental permits and extra trash pick-up days, etc., but let’s stay focused on water and sewer, beach and marina.
SICTA has long contended that water and sewer are receiving too high a percentage of the allocated expenses. No hard evidence is provided to support these percentages, which public records show far exceed the water & sewer allocation percentages of neighboring island towns.
The effect is that monies move out of the municipal budget and into the utility.
Direct effect to SIC Taxpayers?
1. Taxpayers lose a tax deduction since water & sewer charges are not tax-deductible. 2. Perhaps more importantly, the aggressive allocations help the City stay under the state’s tax caps. This means that the total cost we pay for both water & sewer and the local purpose tax combined are commensurately higher than they should be.
On the other hand, the City is ultra conservative in cost allocations to the beach and marina. For example, if the Police spend 2% of their effort on water & sewer facilities, shouldn’t the more heavily patrolled beach get an even larger share?
This holds true for many other of the listed departments which have significant more duties than shown to cover beach and marina related activities.
The effect is that taxpayers disproportionately subsidize the enjoyment of vacationers. We also note that beach tag fees in Avalon, Stone Harbor, Cape May and Cape May Point are 20-33% higher than ours which helps to relieve their taxpayer burden.
Taxpayers have a right to ask…
Is the City manipulating the allocation process to favor certain businesses versus others?
Are Water & sewer rates set high to subsidize large volume users?
Is it fair for taxpayers to make up the difference for beach and marina fees that are set deliberately low, just to crowd our town with additional visitors?
Make no mistake that we want a healthy business community as an integral part of Sea Isle City. However, it is becoming clear that City Administration is going overboard in their zeal.
Resident and non-resident taxpayers and non-favored businesses should not be funding an unwritten City mission statement: “To promote the interests of a small number of select favored businesses.”
GARY EGNASKO