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Monday, May 27, 2024

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Stop Drift of Utility Expenses into General Fund, Committee Urges

By Vince Conti

CAPE MAY – Municipal Taxation and Revenue Advisory Committee (MTRAC) Chair Dennis Crowley Nov. 3 introduced a new issue to Cape May City Council. He said expenses that belong to the city’s three self-financing utilities are creeping back into the general fund budget, forcing the taxpayers to pay the bills.
Cape May has three self-financing utilities for water and sewer, beach, and tourism activities. In theory, each utility is self-liquidating, meaning it sets its user fee structure to generate the revenue needed to cover its expenses. According to MTRAC’s analysis, that isn’t happening and hasn’t been happening for a long time.
“The utility’s purpose is to relieve the financial burden on the general fund and on the taxpayers who support that fund,” Crowley said. 
Instead, MTRAC believes there has been a “creeping subsidy” of the utilities by the taxpayers.
Each of the utilities has a source of revenue. Water and sewer rates are intended to cover the cost of the water and sewer utility. Beach tag revenue should do the same for the beach utility. Funds generated from events are similarly intended to cover the expense of Convention Hall in the tourism utility. In effect, the activities placed under the utilities are to be supported by user fees, not taxes.
Crowley said services being provided by the city to the utilities are not being properly charged to the utility revenue stream, leaving the taxpayers with the bill.
The issue was raised in a council work session and could be the subject of a follow-up discussion.

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