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Last updated Wednesday, May 27, 2015

County Council declared emphatically that it wants nothing to do with property reassessment at this time and probably well into the foreseeable future.

Councilman George Smiley mustered only three votes – his and those of Lisa Diller and Janet Kilpatrick – for a measure to establish a fund to pay for bringing the official valuation of residential, commercial and industrial real estate for tax purposes up to something approximating current market prices. Assessment is now based on 1983 market values. Nine council members voted against the proposal and one – Penrose Hollins – was absent for personal reasons.

Anyone attending Council’s plenary session on May 26 would have been hard put to recognize that reassessment was at the crux of an acrimonious dispute between  Smiley and County Executive Tom Gordon and his administration.  There was no discussion nor any comments before the votes on the reassessment measure or a move by Smiley to cut $96,000 from  the county’s operating budget for the coming fiscal year. That money will finance the second year of a contract with a Wilmington family’s firm to write grant applications. Had the amendment – which received only Smiley’s vote – been successful it would have been the first time in recent memory that Council tampered with an administration’s proposed budget.

The $256.7 million operating budget was then approved unanimously as were a $56.6 million capital budget to finance 59 projects and authorization for sale of $44.3 million of long-term bonds to finance capital spending. The property tax rate for unincorporated  areas of the county for the coming fiscal year was set at 70.06¢ for each $100 of currently assessed property value, unchanged from this  year. The rate is scaled down in unincorporated municipalities depending upon the amount of public services those governments provide.

Lack of public discussion or debate at the evening session  was in sharp contrast to what happened at an afternoon meeting of Council’s finance committee chaired by Smiley. There was extended discussion not only about the proposed ordinances but also about some of Smiley’s peeves with the administration. Generally those have to do with the councilman’s claim that the administration is not forthcoming with responses to his legitimate inquiries.

At one point Samuel Guy, deputy chief administrator officer, said he was not at liberty to disclose details of how the county’s $48 million ‘tax stabilization fund’ is invested because of a threatened lawsuit. Smiley denied that he had asked for an ‘interpretation’ of investment income, fees and such but “just the numbers.” Guy charged that someone associated with Council, whom he did not identify, was leaking information to whomever has threatened the suit, whom he also did not identify. Smiley, however, indicated that might refer to auditor Bob Wasserbach, who has challenged administration investment policies. The auditor is employed by County Council.

The reassessment issue was clearly aimed at the ‘tax stabilization fund’ which was established during Gordon’s first time as county executive from proceeds of the property transfer tax enhanced by the real estate boom of a decade ago. It has enabled Gordon to boast that he has not proposed a real estate tax increase during this entire time in office. County Council also has benefitted politically because it is the entity which actually sets the tax rate.

After the ordinance to establish the assessment fund failed Smiley withdrew a companion ordinance transferring $20 million from the stabilization account because “there is no place to put it.” He also withdrew a proposal to require reassessment to be completed by 2017. He said he would “leave it up to somebody else” to take up the issue.

Apparently realizing that he didn’t have the votes to enact his proposed ordinances, Smiley said at the committee meeting, “Eventually we’re going to have to do it.” Some Council members agreed but also agreed now is not the time to do it.

The strongest opposition to reassessment at the afternoon committee meeting was by Bill Bell, who argued it would fall most heavily on residential property owners in the area of the county south of the Chesapeake & Delaware Canal.  The majority of them would see significant tax increases at a time when they’re adversely impacted by the economy, he said.

A study a few years ago indicated there would be tax increases and decreases as a result of reassessment. Calling the present situation unfair Smiley opined that those whose taxes would increase are currently subsidizing those who will get tax cuts.

The new assessments would also be used to calculate taxes levied by public school districts, providing them the opportunity to generate a potential windfall.

Chief Administrative Officer David Grimaldi told the committee that even an on-paper transfer of some 20% of money from reserve accounts, including the so-called rainy day fund, would not sit well with Wall Street investment-rating agencies. It would be “a good way to lose our triple-A bond rating,” he said. It also would deprive the administration of financial flexibility to cope with economic downturns, which occurred in 2008 and 2009.

Several Council members took issue with Smiley’s claim that setting up a reassessment fund wasn’t the same as authorizing reassessment at this time. “Creating the account and giving money to it signals where we’re going,” David Tackett said.

There was agreement that, if reassessment is going to happen, it should be done in all three counties and primarily financed by state government. It was also agreed that the likelihood of that happening is slim to non-existent.

There also is little doubt that issues between Smiley and the administration are far from over. At the plenary session he introduced proposed ordinances to require the finance department to provide fiscal-impact notes in a timely fashion for all proposed legislation and to give Council employees pay raises. Gordon vetoed an earlier measure to do that and the law department ruled the veto valid.


 

 

All content, unless otherwise noted, by Jim Parks

 

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