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May 24, 2006

 

Enactment of the first increase in the property tax rate in 11 years was described as just a first step toward providing for the long-term financial health of county government. At best, the 5% boost "will buy us additional time to deal with our [long-term] fiscal problems," chief financial officer Michael Strine said.

Before County Council approved the tax hike by a nine-to-four vote, Councilwoman Karen Venezky, who chairs its finance committee, announced that she will present a resolution establishing a taskforce to look at potential new sources of revenue and develop a strategy for tapping into them.

"We're not going to just sit around and talk," she said. The taskforce will be required to produce "concrete recommendations by the end of the year" with a view to mounting an effort to secure enabling state legislation when the General Assembly opens its next session in January.

County Executive Christopher Coons endorsed the idea of establishing the taskforce and said it and the follow-up after it reports will be a joint effort by the legislative and executive branches of county government. It is intended, he said, to build on the cooperative relationship which resulted in a relatively smooth process leading to enactment of a record $229.9 million operating budget and the higher tax rate to help finance it.

The panel will include representation from both the public and private sectors and probably will employ consultant services. Its meetings will be open to the public, Venezky promised.

Although she said that "everything is on the table" as far as what the taskforce will consider, she indicated that seeking to share proceeds from one or more of  the several state revenue streams would be most logical course. "Only one other state -- Mississippi -- doesn't have revenue sharing. I find that odious," she said. The only state tax which New Castle County now shares is the real estate transfer tax.

Moreover, she added, the state pays for several public services -- ranging from police protection to snow-plowing -- which Kent and Sussex Countians receive while New Castle County residents have to finance them with county taxes. "We get back only about 30% of what we pay [in taxes] to the state," she said.

Recognized as a less-likely possibility is property reassessment, which would affect both county and school district tax rates. The last reassessment was in 1985 and current assessments are based on 1983 market values. The finance committee was told that a reassessment would likely result in a third of property owners paying higher taxes, a third paying lower taxes and the other third paying an unchanged amount. In terms of total revenue produced, however, the immediately resulting increase is limited to approximately what it would cost to conduct the reassessment.

Before Venezky publicly announced her intention to establish the taskforce, Councilman Robert Weiner sparked immediate controversy by proposing that consideration be given to curtailing or doing way with incremental pay increases for county employees based on length of service.  "The county is off its financial track and is headed for a collision," he said, adding that dealing with personnel costs, which account for 72% of county spending, is the only way to avert that.

He placed three resolutions based on that idea on the Council agenda for introduction, but withdrew them after several of his Council colleagues and officials of some of the unions to which county employees belong expressed strong opposition on the grounds that such issues are more appropriate topics for collective bargaining than for legislative action. Weiner said that his intent had been to launch discussion of the matter and expressed satisfaction that that had been accomplished.

Venezky, the second longest-serving member of Council, has announced that she will not seek re-election in November and so will be out of office when the taskforce reports.

Council's approval of  the budget on May 23  was by a 12-to-one vote, with William Tansey opposing it. He was joined in opposing the higher tax rate by Patty Powell, Timothy Sheldon and Weiner.

Except for some last-minute tweaking, which shaved $316,491 from the bottom line, the enacted budget was what Coons had requested in March. The tax increase is the maximum permitted under county law.

The spending plan, which combines general operations and the cost of providing sanitary sewer service, is up 7% from what was approved a year ago for the current fiscal year, which ends on June 30. Strine said actual spending this year is projected to be $5 million under budget. As a result, the approved fiscal 2007 budget, if fully spent, represents a 9% increase.

Property owners in unincorporated areas of the county will be billed 47.78 for each $100 of assessed property value with payment due by Sept. 30. The current rate is 45.5. The fiscal 2007 rate will be scaled down in municipalities, depending on the extent of county services provided, to 17.22 in Delaware City, Middletown and New Castle and 16.59 in Newark and Wilmington.

The same legislation imposes variable increases in the taxes to finance street lighting and school crossing guards, depending respectively upon the type of fixture and public school district served. Also enacted was a modest increase in sewer fees, which are based upon water consumption, said to align charges with the actual cost of providing that service.

The rest of the package of revenue ordinances, which were each approved by 12-to-one votes with Jea Street in opposition, included a $58.5 million capital budget and six-year capital-spending plan, neither of which contain significant new projects; and authorization to sell $70 million worth of bonds this summer to finance capital spending and replace money 'borrowed' from reserve accounts and $50 million worth early next calendar year.

Coons signed the package of legislation into law immediately after the Council session.

During the session and at a finance committee meeting earlier in the day, Council members were unanimous in praising Strine and the Coons administration for the cooperative effort to explain and justify the proposed budget. Venezky said that literally no questions went unanswered during the series of budget hearings which her committee held.

George Smiley, vice chairman of the finance committee, said that, as a result of close examination of the proposed budget, "I can't find any more significant cuts to make a difference." Since the expanded Council took office 18 months ago "we've made too much progress to start going backward," he said.

Penrose Hollins said that, as a result of the budget presentations "we know exactly what the financial picture of New Castle County is." Failure to enact the budget and tax increase would only delay the inevitable and would be "a disservice to the people of the county."

Sheldon said he voted against the tax increase because that was the direction he received from all 13 civic associations in his district whose meetings he attends.

Powell said she opposed it because her district, which includes about half of the area south of the Chesapeake & Delaware Canal, have not received a commensurate portion of county services. "Folks I represent have paid taxes for a number of years to support the north [part] of the county," she said.

William Bell, who also has a large constituency south of the canal, said he was satisfied that "we have sorted through all the figures" and that, although unpopular, the tax increase was justified during the budget hearings.

Tansey said he was unwilling to vote in favor of the budget or the tax increase until "we have the guts to be able to make the hard cuts."

Council president Paul Clark said he is convinced that residents of the county appreciate the services that county government provides. He said the additional cost -- which the administration has calculated to amount to $16 for a 'typical' residential property -- is not too much to pay "to have a cop or paramedic show up at the door when you need them."

2006. All rights reserved.

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