to the precipitous drop in activity in the real
estate market, New Castle County government will
come face to face with a budget crisis sooner than
had been expected.
"We have to take action this
fiscal year," chief financial officer Michael Strine told
the monthly meeting of officers of 'umbrella' civic
organizations. "Internally, we're (the Coons administration)
working on a plan to do that."
Jeff Bullock, chief
administrative officer and second-ranking county official,
did not specify what the plan will propose, but he did refer
to it as involving "shared pain across county government --
employees and taxpayers."
He indicated that the plan
will be presented to County Council soon after at least two
and possibly three new members are sworn into office on Nov.
14. Three other members whose terms are expiring will be
returned without opposition in the Nov. 7 election and there
are seven whose terms do not expire until 2008.
Council president Paul Clark
said the biggest problem he anticipates will be to convince
the public that county government is in a fiscally
precarious position. Running a close second to that, he
said, will be to get the public to understand that New
Castle County property tax is low both when measured against
the services that county government provides and when
compared to levies in other jurisdictions in the region.
Many people, Clark said, do
not differentiate between the county tax and the property
tax that school districts impose. School taxes have gone up
significantly while the county tax rate and property
assessments remained unchanged for 11 years until this year.
Strine said that, when adjusted for the increase in
residential property values, county taxpayers enjoyed the
equivalent of having their tax cut by about a third.
"A buck a day is a hell of a
good deal. If it goes to a buck fifty, it's still a good
deal," Clark said. "You (civic leaders) are going to have to
help us get that [message] across."
It was obvious from
discussion at the meeting on Nov. 2 that county property
owners can expect an increase in the property-tax rate in
the coming fiscal year and that it most likely will be
significantly higher than the 5% increase imposed for the
present fiscal year.
Also likely will be a
reduction in the size of the county workforce.
However, neither of those
things can be done in the immediate future. The tax rate
cannot be changed during the fiscal year, which does not end
until June 30, and most contracts with the heavily unionized
workforce have clauses prohibiting involuntary terminations
other than for disciplinary cause.
That would indicate that if
Council is asked to take any actions before dealing with the
proposed fiscal 2008 budget which County Executive
Christopher Coons will submit in March it will have to be
directed toward making cuts in existing budgets of county
departments. That translates into reductions in some
Referring to the as yet
incomplete plan, Bullock said the administration "is trying
to do it in a way that is thoughtful [and] not degrade
services more than is necessary."
In a separate context, Strine
noted that one of the options now being considered by the
taskforce established to produce recommendations for a
long-term restructuring of county finances is
'privatization' of some public services. The panel is
looking at "services that can be done more effectively by
the private sector," he said. But he added that presupposes
the ability to find a private, presumably for-profit, entity
able or willing to take on such services.
Strine said the county
workforce grew by about 200 positions between 1998 and 2005.
Each year, about 60 positions become vacant and roughly half
of those are open to a decision whether or not they should
be filled. "Our hope is that we would be able to do it
(reduce the workforce) by attrition, but you never say
The alternative, he added, is
"to reorganize government and not do everything we [now]
Clark said that cutting the
number of employees and reducing the level of county
services would be counter to "everything I've heard" at
civic meetings and private conversations. "People say we
don't have enough police or code inspectors," he said.
As Delaforum previously
reported, the looming crisis is the result of a
much-sharper-than-anticipated drop in revenue from the
property transfer tax. Estimated income from that source has
already been reduced by $6.4 million and Strine said it is
now anticipated that a further reduction will be necessary.
Year-to-date, he said, the
drop in revenue from that tax has almost wiped out the
full-year anticipated gain from the higher real-estate tax.
"Real estate was a great place to be in the '90s; now it's a
lousy place to be," he said. New Castle County is almost
totally dependent upon real estate for its income.
Spread across the entire
county budget, Strine said, real estate tax provides $1 for
every $1.26 county government spends on service delivery.
Another possible long-term
solution, he said, would be to reassess properties to bring
the assessments in line with market values. State law
provides, however, that the tax rate would have to be
reduced to the extent that the reassessment would result in
no more than a 15% increase in county revenue. That, he
added, would do little more than cover the cost of the
reassessment. School districts, however, would be allowed a
10% revenue increase, presumably without have to occur any
expense in connection with the reassessment.
Clark indicated that one step
County Council is likely to take in the near future will be
to remove the 5% ceiling on the size of a property-tax
increase the county executive is permitted to propose. Clark
explained that the limit is "meaningless" because it applies
only to what can be proposed and not to what Council is
permitted to enact. On the other hand, he said, seeking to
impose an increase by "a double-digit percentage" would
certainly draw public opposition irrespective of the dollar
amount that involved.
running projection of what would be required if present
revenue and spending patterns are allowed to continue and if
the entire then-anticipated budget shortfall had to be made
up by the real estate tax would be a rate increase in
excess of 30% in fiscal 2009.
To avoid that, Bullock said,
"it is important to address the issues now."
"People tell me, 'Don't do to
us [then] what Delmarva [Power] did to us'," Clark added.