March 23, 2005

With an unusually strong display of solidarity, not only within its own ranks but also with the county administration, County Council voted unanimously to establish reserve accounts to maintain property tax and sewer fee rates at current levels.

The unanimous vote came after Richard Korn, one of two residents challenging the legality of maintaining large budget reserves, told the lawmakers that he will go back to Court of Chancery seeking to overturn the two ordinances enacted to do that.

He called the measure an "after-the-fact pardon of unlawful conduct" and said that it "does anything but put right the errors you have inherited."

Council president Paul Clark said that enacting the ordinances ordinances virtually guarantees "another four years of no tax increases."

The action, he said, "answers the Chancery Court order" and is "the best use of the reserve funds for the taxpayers of the county."

The court previously declared that several reserve accounts established during the administration of former County Executive Thomas Gordon were illegal because they had not been set up by legislative

Finance director named

County Executive Christopher Coons finished the aligning of county government's upper management by nominating Michael Strine to be chief financial officer.

Strine has been executive director of the Delaware Public Policy Institute and is a former director of policy and operations in the state Department of Finance.

His appointment is subject to County Council confirmation.

action. Although Chancellor William Chandler said that the county's 'rainy day' fund -- a set-aside intended to provide money to meet major unforeseen emergencies -- met that constitutional test, he questioned its size in a footnote in his decision. The county fund is set at 20% of the operating budget while state government has a comparable fund that is only 5% of its budget.

Enabling legislation enacted by Council at its regular session on Mar. 22 provides for two new accounts, a Tax Stabilization Reserve Account and a Sewer Rate Stabilization Account. They are in addition to the existing Budget Reserve Account -- the official name of the 'rainy day' fund -- which is kept at its present size.

A companion measure, also enacted unanimously but without prior discussion, amends the current budget to provide $96,423,196 for the tax rate preservation account and $71,661,804 for sewer fee rate preservation

Those amounts are the sums of several Gordon-era off-budget accounts as of last June 30 minus what has been appropriated since then. The county's fiscal year runs from July 1 through June 30.

Korn and his co-plaintiff in the civil suit, Andrew Dal Nogare, have asked Chandler to order county government to refund the money in the accounts he found to be illegal to taxpayers. County officials have maintained that not only would be 'fiscally irresponsible' but would result in a situation where property owners would receive a check in May or June and be required to pay a higher amount when their tax became due in September.

Speaking at a meeting of Council's finance committee prior to Council's general session, Korn said that would not necessarily happen. He said elected officials have the responsibility to manage taxpayers' money and to accept the need to balance budgets by raising taxes or cutting spending.

At the Council session, Korn vehemently objected to a reference in the preamble of the enabling ordinance to the funds that Chandler struck down as being "technically illegal." He said that a 26-page judicial opinion could not be misconstrued as "an order [referring to] a mere technicality."

Both at the committee meeting and during the Council session, Council members lined up behind Clark and County Executive Christopher Coons's administration in rejecting the idea of a refund. All 12 district Council members signed on as co-sponsors with Clark of the two account-establishing ordinances.

Councilman George Smiley noted that he has about 40,000 constituents in his district "and I heard from only one who wants a rebate."

"If we didn't have the reserves, we'd have an increase in taxes every year," said Councilman Penrose Hollins. He added that residents generally are happy with "the services and programs they've enjoyed for the past 10 years without a tax increase."

David Singleton, the county's chief administrative officer and second-ranking executive, testified on behalf of the Coons administration that "I hear no clamoring for cuts in county services."

The enabling ordinance specifically provides that the money in the funds can be used only to offset budget deficits or to avoid having to borrow money through the sale of bonds. Both the general fund and sewer budgets are currently running deficits. There is general agreement that sewer rates will have to be increased in either fiscal 2006 or 2007.

"We are taking action that is legally correct," Councilman Robert Weiner said. "The fiscally prudent thing to do is the course we're taking."

"We are answering what it is that we have been asked by the court to do," said Councilwoman Karen Venezky, who chairs the finance committee.

Councilman Timothy Sheldon said, "By doing it the way we're doing it, I feel confident that we are doing the right thing."

Korn received support for his position from Vincent Sottile, a civic association president, who said that enacting the ordinances instead of approving a rebate was "arrogant and paternalistic" and was being done "not for the convenience of taxpayers [but] for your convenience to get re-elected."

County resident Charles Johnson said he was "appalled that [his fellow] Democrats are not willing to give the people their money back." Democrats hold an 11-to-two majority on Council.

On the other hand, long-time civic activist Marion Stewart told the finance committee that even considering a tax rebate "is as silly as anything I've seen in a long time." She said that "what people don't like is uncertainty and instability" when it comes to such things as their year-to-year tax liability.

2005. All rights reserved.

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