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March 21, 2006

 

County Executive Christopher Coons asked County Council for a 5% increase in the basic property tax rate while promising to cut "millions of dollars in costs without affecting vital services," curb spending and seek financial help from state and federal governments.

Coons presented Council with a proposed $230.25 million consolidated budget for the fiscal year which begins July 1. That would be up 7.35% from the $214.49 million budget it approved a year ago.

The fiscal 2007 plan includes spending $165.07 million on government operations and $60.2 million for sanitary sewer service. Comparable fiscal 2006 figures in the originally approved fiscal 2006 budget are not included in the budget document, but the most recent 'snapshot' report on the county's financial situation projected actual spending in those categories this fiscal year to be $122.6 million and $56.2 million, respectively.

Coons also proposed a further increase in sewer-service fees, which he said would amount to an additional $9.36 on the average residential bill. That increase, he said, is needed to cover a 117% increase in the cost of electricity to operate pumping stations on the sewer network.

Coons also handed Council a proposed $58.37 million capital spending plan, which would be up from projected expenditures of $42.3 million this fiscal year. The county has delayed going to the bond market to borrow for capital projects, but officials have said that it will be necessary to do so soon. Debt service on bonds is paid from the operating budget.

Council is expected to scrutinize proposed departmental budgets more thoroughly this year than in the past. A series of public hearings has been scheduled before it acts on the entire budget package in late May. In recent past years, approved budgets went through virtually unchanged from the executive's proposal.

Council members are particularly wary of voting a tax increase. Six of the 13 seats are up for election in November.

Council president Paul Clark said after Coons's address on Mar. 21 that he wants "to work the numbers" before committing one way or the other on a tax increase. "I want to work with Chis on this ... to see what serves the citizens of New Castle County the best," he said.

Councilwoman Karen Venezky, who chairs Council's finance committee, said Council "owes it to the taxpayers to see if we can cut costs" to a greater extent than Coons proposed "before we talk about a tax increase." Venezky, whose term expires this year, has declared that she will not seek re-election.

Coons presented the proposed tax increase as being the equivalent of "a modest $16 a year ... for the average homeowner." The average bill, due at the end of September, would increase from $326 to $342, he said. For owners who qualify for the senior-citizen discount, the average would go from $100 to $105.

The proposed new rate in unincorporated areas of the county is 47.78 for each $100 of assessed property value. That would be scaled down in municipalities to 16.59 in Newark and Wilmington. Those lower rates are based on the amount of county services which residents of the municipalities do not receive. The current basic rate is 45.5.

Coons detailed an extensive array of county services paid for primarily by property and real estate transfer taxes. The largest portion of county spending -- 48% -- goes for public safety. Other categories are: libraries, 14%; parks, 13%; land use and code enforcement, 8%; and sports, recreation and community programs, 6%. Administrative overhead, he said, accounts for 6% of the general fund spending.

Although Coons listed several cost-cutting measures to be imposed during the coming fiscal year, he declared that "cutting costs alone is not enough" to meet the county's structural financial problems.

"While I do not lightly propose this property-tax increase, it is the most fiscally responsible thing we can do given our situation," he said.

Even if the tax increase is enacted, Coons said it will require using $10 million from the county's budget reserve -- which he likened to a family's savings account -- to balance the budget. There is no intention to use the so-called 'rainy day fund', a reserve apart from the budget reserve maintained to meet genuine emergency situations.

He said that, on top of cuts during the current fiscal year, his proposed budget foresees "zero growth" in the size of the county workforce. There are about 1,650 county employees. Adding 10 additional police officers will be offset, Coons said, by eliminating 18 unfilled positions in operating and administrative departments. Overtime, seasonal employment, travel and training will all be reduced, he said.

He said there will be no significant program initiatives and that $4 million has been cut from existing programs . Another $4.5 million in additional financing requests from department managers have been denied, he said.

Coons spoke in vague terms about seeking federal financial assistance. He said the county absorbed a 15% reduction in federal financing but is "not in a position to replace additional funding cuts."

He said he will ask the state legislature to increase the county's share of the real estate transfer tax by eliminating the exemption for first-time home buyers, irrespective of their incomes, as it applied to that portion of the tax. According to Michael Strine, the county's chief financial officer, the exemption amounted to $3.5 million last year. Some of the increased revenue would be used to support 'affordable' housing and home-ownership initiatives, he said.

Coons reiterated the previously reported contention that incremental tax increases beginning this year will eliminate the necessity to go for a massive increase or impose draconian cuts in county services  two or three years hence.

2006. All rights reserved.

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