DEWEY BEACH, DEL., JULY 17 -- After six years, the cost of being a town has caught up with the state's youngest municipality.

Townspeople will be asked Saturday to approve a yearly $35 flat-rate property tax for residents and a business license fee for merchants. The taxes are designed to help ease an expected $35,000 shortfall in the town's $355,000 operating budget for 1987.

Dewey Beach has not had a property tax since it was incorporated in 1981.

"It's just a stopgap measure," said Mayor Allen J.H. Quillen.

"Everybody wants to keep the lifeguards on the beach. They don't want to give up the police . . . . They're willing to pay for it," Quillen said.

Town Commissioner Alexander J. Pires Jr., who proposed the flat-rate property tax, said he came up with the $35 fee by dividing the expected shortfall by the 1,000 properties in town.

"That's pretty cheap," he said.

When Dewey was incorporated, residents' opposition to a property tax prompted the state legislature to stipulate that none could be started unless it was approved by a referendum. Since then, the town has been financed largely by parking fees, traffic and parking fines and building permits.

But a moratorium on construction -- expected

"Everybody wants to keep the lifeguards on the beach. They don't want to give up the police . . . . They're willing to pay for it."

-- Mayor Allen J.H. Quillen

to be lifted in the next few months -- has cut into building permit revenue.

Under the flat-rate property tax, each owner of real estate and those who hold leases of five years or more would pay a $35 fee for each parcel, home or condominium owned.

Under the proposal, the amount would be set by town commissioners each year. It could not exceed $50.

The proposed business license fee would average $150 a year for most year-round businesses.

Opponents of the package contend the town government has not been conservative in its spending.

"If they don't want to approve it, we reduce services," Pires said.

"If it doesn't pass, it means . . . they don't want some of the services," he said.

Businessman and former mayor J. Bruce Vavala said the added expenses have come as property owners have pressed for greater restrictions in the community.

"The drinking on the beach {ban} has put a great strain" on the town, he said.

Dewey voters approved a ban on alcohol on the beach in 1985.

"You've got to come up with some way to support" services, Vavala said. "I just think everybody should share . . . . As long as everybody's going to pay, I think it's fine."