ago, former County Executive Tom Gordon enthusiastically
delivered a self-laudatory valediction, graciously spreading
credit among those in the upper echelon of his administration
for a stewardship well done, as he presented his eighth and last
budget to Council. Topping a litany of accomplishments were
absence of any property tax increase during his tenure, a $242
million surplus -- his number and terminology -- and triple-a
bond ratings from all three Wall Street raters.
unlikely event anyone missed the point, those and other
achievements were reiterated in the 416
pages of text and color photographs which made up a document
entitled 'Excellence 1997-2004: A Final Report to the People of
New Castle County'.
asked for just under $206 million. Adding $1.5 million to
finance its own doubling in compliance with a state law which
many, including Council itself, deemed ill-advised or worse,
Council gave him $207.5 million and change.
months later, things couldn't be more different.
Executive Christopher Coons came before the expanded Council
with a request for $214.5 million contained in a speech which
bordered on the austere. The county, he said, is not flush with
perception is that we're sitting on an enormous 'surplus' -- an
incredible pile of loose cash that we can spend freely on
anything we choose. The reality is that we do have a substantial
accumulated reserve, but we've also been increasing our
expenditures over the past few years at a brisk pace and are now
spending significantly more than we are taking in," he said.
administration describes its $214.5 million spending plan as a
3.35% increase over the $207.5 million fiscal 2005 budget which
Council originally approved. However, Council has since
authorized spending an additional $3 million. That would make
the proposed budget only 1.8% higher than the current one as it
stood on Mar. 30.
after taking office in January, Coons hired Nachman Hayes
Brownstein, a consulting firm, to make an independent evaluation
of county finances. Chief administrative officer David Singleton
told Delaforum that had intended to have someone from the firm
share the results of that study with Council's finance committee
on Apr. 12, but had put off doing so when the committee meeting
ran beyond the scheduled time. He declined a Delaforum request
for a copy of their report before what he said would be a mostly
oral presentation is made at the committee's next meeting.
has proposed that 27.3% of the $168 million designated as
property tax- and sewer rate-stabilization reserves as of March
30 be spent to balance fiscal 2006 general and sewer fund
that is done, those reserves may total $63.4 million come June
30, 2006. There would be another $42.9 million in the county's
'rainy day' funds. Existing county law requires setting aside
the equivalent of 20% of the budget in order to have money to
meet any emergency that might occur.
$242 million that Gordon spoke of in March, 2004, included the
emergency accounts. It had declined to $230.5 when fiscal 2005
began last July 1 and has further melted to $204.8 million by
Mar. 30. Council and the Coons administration have indicated
that they don't want to further erode the reserves between now
and June 30, when this fiscal year ends.
that sounds complex in the telling, it is further complicated by
a pending lawsuit. Because how the suit will turn out is an
unknown, comments about the county budget have to be qualified
by the word 'may'.
Richard Korn, who had sought the Democratic nomination which
Coons won to run for county executive, and an associate, Andrew
Dal Nogare, have asked Court of Chancery to order the county to
"return to the taxpayers" the reserves that were accumulated in
accounts the court previously ruled to be illegal since they had
not been authorized by Council.
Council has since retroactively combined several off-budget
accounts into a tax rate stabilization account and a sewer fee
stabilization account. They make up the non-emergency reserves.
The preamble to the ordinance establishing the new accounts
referred to the court determination that the previous
arrangement was illegal as having turned on a "technicality."
suit also has been amended to seek a declaration that the 'rainy
day' funds are too large. In his original opinion, Chancellor
William Chandler raised that point in a footnote questioning
whether county government, as a 'creature of the state', had the
authority to establish such funds in excess of the 5% set-aside
that state government maintains. He did not rule on the matter
because it was not then before the court.
told Delaforum that there is nothing in recent county actions or
pronouncements that deters continuing to press the lawsuit.
years, county spending has caused deficits in both the general
fund and the sewer fund -- deficits that our elected officials
knew about and permitted. There is nothing in the proposed 2006
county budget of approximately $214 million that justifies
keeping almost $240-plus million [sic] of illegally accumulated
surplus taxpayer dollars," he said in a statement.
continued operating deficits can be and should be dealt with
responsibly by cutting spending and not by threatening to cut
services or to raise taxes. Any claim by anyone that $240 plus
million is needed to eliminate the deficits is irresponsible and
the money would be 'returned' if the court were to so rule is
anything but certain. Suggestions include mailing everyone who
pays property tax a check or declaring a 'tax holiday' for the
coming year. Coons, Singleton and other county officials have
said that either would be fiscally irresponsible and would
result in an immediate huge tax rate increase or a drastic cut
in county services and wholesale layoffs of county employees or
Property taxes account for only a third of county revenue. Sewer
fees are a fourth and the real estate transfer tax makes up
about 15% of the total. All those and other sources contributed
to the reserves. There has been virtually no public discussion
about how any 'return' could be equitably distributed among them
or, for that matter, residents who have moved into or left the
county during the several years that the reserves were being
Meanwhile, Council on Apr. 12 received a package of proposed
legislation that would authorize the course which Coons
core are the budget ordinances. In addition to the one
authorizing the $214.5 million for operations, there is one
providing for $58.7 million of capital spending. Of that, $40.7
million would go to sewer-related projects of which the largest
are expansion of the sanitary system south of the Chesapeake &
Delaware Canal, $30 million; and continued rehabilitation of the
system in Brandywine Hundred, $8 million.
capital budget also restores the $10 million previously cut from
the parkland-acquisition fund to partly finance $17 million for
stormwater- and flooding-related projects. Previously authorized
$2 million for capital projects at Carousel Farms park would be
eliminated. Expansion of the Hockessin library would be financed
by just under $1 million and $686,000 would go to the new
Woodlawn library in west Wilmington.
Capital spending would be financed in part by a $10 million bond
issue Council is asked to authorize. An $80 million issue was
authorized in 2004, but was challenged in the Korn-Dal Nogare
lawsuit. County officials agreed to defer selling the bonds and
Chandler accepted that in lieu of issuing a preliminary
injunction barring the sale. He later ruled against a permanent
biggest change from the previous bond proposal is elimination of
$25.6 million previously authorized for sewer work and $8.8
million for parks.
proposed that 95% of the sewer rate stabilization fund be
diverted to finance the sewer work. In addition, Council is
being asked to increase sewer rates by 28.1%. The average
residential charge would increase to $233.70 from $170.50,
according to the fiscal note attached to the proposed ordinance.
Instead of the entire amount coming due on Feb. 28, as has been
the practice, bills would be payable in two installments.
been generally assumed that a sewer fee increase -- the first in
12 years -- was in the offing.
property tax rate would remain at 45.5¢ for each $100 of
assessed value in unincorporated areas of the county. Because
residents of municipalities do not receive all county services,
their rates will be lower. The difference ranges from 7.75¢ in
Arden, Ardentown and Ardencroft to 29.1¢ in Middletown and 29.7¢
in Wilmington and Newark.
proposed to be increased are fees charged by the sheriff and
recorder of deeds. They are estimated to yield approximately $1
million and between $1.2 million and $1.5 million, respectively,
in annual revenue.