News

June 2, 2003

Governor Ruth Ann Minner took under advisement a report from a taskforce she established to find some possible solutions to Wilmington city government's long-term revenue problems. Her initial response after receiving it apparently fell far short of enthusiastic.

"The next step may be to recommend an action of the General Assembly prior to June 30. But she will decide once she reviews the report," said her press secretary Gregory Patterson. He pointedly emphasized the word 'may'.

That was in sharp contrast to the bonhomme that prevailed at a joint appearance with Wilmington Mayor James Baker in March at which she announced formation of the taskforce and pledged cooperation in supporting remedies for what the mayor described as 'structural' problems in the city's ability to raise money to finance government operations. Minner also is trying to deal with 'structural problems' in the state's financial situation.

Patterson claimed the qualification about whether to actually seek Assembly approvals, where necessary, for any of the taskforce's recommendations was present from the beginning, but, if so, it was not the dominant theme.

Neither the governor nor the mayor was made available for direct comment.

Patterson was also non-committal about when, if ever, a move to seek legislative approval might come. "She wants to take some time to review [the report] and consider the recommendations," he said. The legislature, by law, must adjourn June 30 and will not meet again until next January, unless called into special session by the governor or its leadership.

The report noted that Baker submitted and City Council approved bare-bones operating and capital budgets for the fiscal year that begins July 1. Deferred capital borrowing, denial of cost-of-living pay raises to city employees and cost containment measures, it said, have paired slightly the long-term annual budget deficit projected by Public Financial Management, a consulting firm, to about $9.3 million from $12 million in fiscal 2007.

New York City and Boston, it said, are just two of many municipalities around the nation that face budget crises. "By taking action now to address these adverse trends -- before the city's reserves are depleted and the choices available become more stark -- Wilmington is positioned to avoid such full-blown crisis [sic] and disruption," it said.

As Delaforum first reported, the panel recommends a two-step approach. (The full text of the report is available by using the link at the end of this article)

Initially, it asks imposition of $1-a-month surcharges on water and trash collection as ways to obtain an equitable return on investment in city-owned or -located assets -- specifically Hoopes Dam and Reservoir and the Cherry Island Landfill. Setting up those or comparable revenue streams would produce the most significant new revenue.

Both proposals, however, received close to a thumbs down from influential legislators who were members of the taskforce. State Senator Harris McDowell said he opposes linking the city with Cherry Island because it would send a signal of city support for the Delaware Solid Waste Authority's bid to significantly expand the facility. Representative Wayne Smith said he opposes any piggybacking on water conservation legislation he has sponsored and which is now pending in the Assembly. Smith previously said he also opposes anything that would convey an impression his suburban constituents were being required to 'bail out' the city.

McDowell is majority leader of the Democrat-controlled state Senate and Smith is his counterpart in the Republican-controlled House of Representatives. Neither lawmaker responded to a Delaforum request for comment as this article was being prepared.

Also recommended are a 2% city lodging tax on top of the state tax; a tax on admissions to entertainment events, increasing the annual fee the Wilmington Parking Authority pays in lieu of taxes; and extending the utility tax on Conectiv Power beyond electricity to include natural gas. The latter, it was noted, has been charged since early in the 20th Century and is considered a cost of doing business, which is factored into the utility's rate base and, therefore, spread among all its customers.

Political observers consider those other recommendations possibly passable in the Assembly, but the revenue they would yield is estimated to fall far short of what the mayor and the consultants say is needed.

Looking beyond possible initial legislative action, the taskforce recommends that it or a similar body carefully study longer-term revenue sources. These would include piggybacking on the state's incorporation franchise tax and fees, state revenue sharing to support repair and upgrading of infrastructure and other measures to spur economic development.

The report trends lightly on the matter of increasing the city's ability to annex adjacent land, even to the point of bringing it into line with what other municipalities have; and tiptoes around the issue of establishing some kind of tax-generating gambling in the city. Both would be highly controversial proposals.

Totally avoided, except for references to the waste and parking authorities, which are quasi-autonomous bodies, is the matter of exacting payments for city services in lieu of taxes by nonprofit, church and government organizations. More than 40% of property in the city, measured by assessed value, is exempt from its real estate tax.

The report was delivered to the governor on May 30, the stated deadline, but not made public until June 2 when the governor's office 'released' it. William Montgomery, Baker's chief of staff, reportedly did the final editing and rewriting.. Public Financial Management was retained to assist in its preparation.

Although all significant points in a penultimate draft were discussed and, to some extent, disputed at the final meeting of the taskforce, the recommendations emerged intact in the final version. Although the taskforce took no votes as such, the report noted that they were the ones, among all that were considered, which had the strongest support of a majority of the 24-member panel. It was co-chaired by Fred Sears, president of the Delaware Community Foundation, and Scott Green, senior executive vice president of M.B.N.A. America.

The section of the report which received the most reworking was a preamble described as "consensus guidelines." In essence, it was strengthened in its endorsement of Wilmington's role as business and cultural hub of the state, acknowledgement of considerable self-help measures, and in pointing out that non-residents benefit greatly from city facilities and services.

Whatever is done to generate additional revenue, it said, should not include anything that would provide a 'disincentive' to living, working or doing business in the city.

2003. All rights reserved.

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