of an increase in the county property-tax rate in
the coming fiscal year gained new impetus with the
presentation by the Coons administration's chief
financial officer to County Council of a set of 'pay
me now or pay me more later' scenarios.
Choices outlined by Michael
Strine at a meeting of Council's finance committee on Feb.
• Do nothing until the budget
reserve runs out in fiscal 2009 and then impose a 33.4% rate
increase, following with a further 31.3% boost in fiscal
2010. That would up the current 45.5¢ rate by an aggregate
of 75.2%. That is up from a 60% increase which has
previously been discussed.
• Do not raise the tax rate
until 2010, but engage in some significant cost cutting
until then. Main component of that would be reducing the
county workforce by between 20 and 30 positions a year,
which would result in diminution of police, ambulance and
library services. The rate would have to be increased by
37.8% in 2010 and 5.8% in 2011, with a compound aggregate
increase of 48.8%.
• Do nothing this year, but
impose 9.9% increases in fiscal 2008 and 2009, following
with 12% in 2010 and 11.8% in 2011 for an aggregate of 22.5%
in the final two years.
• Increase the rate by 9.9%
in each of the next six years to eliminate the need for a
spike in the last year or two of that period.
Strine emphasized that he was
not offering a preview of the proposed budget and
recommended tax policy which County Executive Christopher
Coons is scheduled to deliver on Mar. 21, but giving the
lawmakers something to chew on until then.
"The sooner we come together
to get this done, the better off we'll be," Strine said.
Coons's spokeswoman Christy
Gleason said the executive "has not yet made up his mind"
about the fiscal package. Observers, however, are agreed
that Strine's presentation was a further signal that he is
leaning toward a 'get it over with' approach.
When Councilman Timothy
Sheldon said "None of us around this table wants to vote for
[any] new taxes," Strine replied, "Council and the executive
recognize that you can't keep going the way you are going."
Councilman Jea Street
questioned whether the way Strine presented some supporting
data was intended to make a case. He noted, for instance,
the claim that eliminating 39 already vacant positions
amounted to a savings of $2.2 million while reducing the
executive office contingency fund was stated as a 28% cut.
After Strine acknowledged that it amounted to $190,000,
Street said, "You're using big numbers when it's millions
and big percents when it's thousands."
Unspoken at the meeting but
obviously significant is the fact that six of the 13 members
of Council have to face the voters in November if they want
to retain their seats for another term. Also open to
question would be the willingness of elected officials --
including Coons who is believed almost certain to seek a
second term in 2008 -- to impose six or more successive
annual tax hikes.
Strine said that the impact
of each 10% increase in the property tax would be an
additional $32.60 a year for the 'average' residential
property or $10 if the household qualifies for the
senior-citizen discount. A small business would pay $275
more and major companies up to $80,000, he said. Property
taxes are due on or before Sept. 30 of each year.
Strine said the Coons
administration already has cut the proverbial fat from
county spending. "The reality is ... we've begun to cut not
waste but to cut costs," he said.
That, he said, has "reduced
deficit spending from $25.6 million in fiscal year 2005 to
$6.1 million" in the current fiscal year, which ends on Jun.
Continuing to outspend
revenue, he said, will jeopardize the county's triple-A bond
rating and thereby raise the cost of borrowing money for
capital projects. Rating agencies, he said, will require a
firm plan for meeting necessarily rising costs before
renewing the highest rating. The county previously had
expected going to the bond market in January, but quietly
shelved that intention.
When it comes to
cost-cutting, Strine said there is no viable alternative to
reducing the size of the county workforce. Nearly
three-fourths of general fund spending is for salaries and
employee benefits. By far the largest portion of that, 42%,
is for police and emergency services personnel.
And, he added, "cutting
people means cutting services."
He also said there is no
wiggle room in the 20% 'rainy day' reserve fund. Because the
county has only limited sources of revenue -- the property
tax and realty transfer tax -- the rate is appropriate. The
fund is intended to meet genuine emergencies, he explained.
Although it has never been tapped, it would not last long
"if something like [Hurricane] Katrina passed through," he
said, reminding Council that "you spent $15 million to bail
out just one neighborhood" following a northeaster
Without providing any
details, Strine suggested that county government will go to
the state legislature for help meeting its longer-term
financial needs. Sheldon noted that Kent and Sussex Counties
receive considerably more state-financed services than New
Strine also threw out the
possibility of a general reassessment of property values.
The tax rate is applied to each $100 of assessed value, but
assessments currently are well below market values. The
General Assembly would have to authorize a reassessment --
which would be politically unpopular -- and a principle
usually followed is to make it 'revenue neutral' except for
covering the cost of the survey.
At Council's plenary session
following the finance committee meeting, it enacted, with
minimal discussion, an ordinance which tapped the tax
preservation reserve for $500,000 to help cover primarily
the additional cost of gasoline and diesel fuel between now
and the end of the fiscal year.