prepares package of ideas
to deal with county budget crisis
that county government's "financial situation is serious
[and] requires immediate action," the Financial Future
Taskforce is preparing to offer more than a score of
recommendations ranging from an immediate "substantial"
increase in the property tax rate to a complete reassessment
of property values followed by periodic updates.
A draft of an executive
summary put before the panel's final meeting before
presenting the first installment of a report to County
Executive Christopher Coons and County Council appeared to
garner consensus approval from the nine-member group. No
formal vote was taken.
Members were invited to
submit comments and suggestions for tweaking and rewording
by electronic mail as chief financial officer Michael Strine
puts the draft into final form and assembles the mass of
supporting data previously reviewed by the taskforce and its
committees. If that process turns up any significant
variations in opinion, members will be polled by e.mail,
He said an interim report
will be ready by the Dec. 31 deadline set by the Council
resolution which established the taskforce as a joint
legislative-executive venture. The initial report, however,
will lack what may be the final report's most significant
component: a possible recommendation to overhaul the pay and
benefits system for the 1,350-person county government
That has been delayed until
around mid-January when the taskforce will receive results
of a study by an outside consultant of how the employees
presently compare with those holding comparable positions in
other governments and the private sector. Personnel costs
account for about 70% of the county's $175 million budget.
Also expected then will be
the results of a professional survey of what a
representative sample of county residents desire in the way
of services and how much they are willing to pay to sustain
"The residents of New Castle
County face a choice between the current level of service
and the current price for receiving those services," the
draft executive summary declares. County government "cannot
sustain its current service levels with existing property
tax, fee[s] and other revenue sources."
Coons, who did not
participate in previous meetings to avoid the appearance of
exerting undue influence, attended part of the
taskforce meeting on Dec. 15 to personally thank the
participants whose efforts, he said, demonstrated a
collaborative approach to dealing with a public issue found
in few other places. "In a lot of jurisdictions, they don't
get things done. They just keep going on until they have a
trainwreck," he said.
Former County Councilwoman
Karen Venezky, who sponsored the resolution which
established the taskforce and who co-chaired it with Strine,
hailed the panel's cooperative attitude. Although its
membership reflected a variety of potentially competing
interests, it was able to accomplish what it was intended to
do, she said. "We've done it and there's been no
finger-pointing," she said.
Coons added that he believes
the taskforce report will "respect both our workforce and
the folks who have to pay the bill."
The draft executive summary
states the problem in succinct fashion: "General government
expenditures are projected to grow at an annual rate of
roughly 6% a year while revenues are projected to grow at a
rate of approximately 2% per year. ... Delaying action will
make any solutions much more difficult and painful for
residents and taxpayers in the future."
It points out that the
"financial imbalance" expected to exhaust the reserve fund
being used to balance the operating budget by November,
2008, is the result of "overdependence on revenues related
to real estate." It is considered a foregone conclusion that
county officials will seek approval from the state
legislature to diversify its revenue streams.
The draft executive summary
cites steps taken during the past two years to control
spending and maintain service levels, but declares "there
are no easy budget cuts left."
in the draft executive summary calls for continuing services
at current levels in areas which affect all or a large
majority of county residents. They include public safety and
emergency response, property code enforcement, libraries,
parks and human services.
Less comprehensive services
and special events would be financed to a large degree by
charging participants fees to cover all or most of their
cost. The possibility of 'outsourcing' some activities to
private contractors or concessionaires would be explored.
"There is no solution in the
short term that does not include a substantial increase in
the property tax" Strine told the meeting.
The summary does not suggest
how much the increase should be beyond noting that increases
for the coming and subsequent fiscal years "of more than 5%
will be required to bring the budget into balance."
At a previous meeting the
taskforce called upon County Council to repeal the provision
in county law which prohibits the executive from submitting
a budget request which includes a proposed tax increase of
more than 5%. The law, however, does not restrict Council
from exceeding that amount. An ordinance to remove the cap
has since been introduced and is likely to be voted upon
when Council reconvenes after the turn of the year.
In previous discussions, the
taskforce and its revenue committee have talked in terms of
an order of magnitude of about 15%. The current rate on both
residential and commercial properties is 47.78¢ for
Michael Strine, chief financial officer,
Karen Venezky, former Council Council
Vincent D'Anna, New Castle County Board
Richard Davis, Du Pont Co., former state
Brian McGlinchey, A.F.L.-C.I.O
Pete Ross, former state budget director
and New Castle County chief
Deneen Stewart, general counsel and
secretary, I.N.G. Direct
Richelle Viable, chief executive
officer, Citizens Bank Delaware
James Wolfe, president and chief
executive officer, Delaware State
Chamber of Commerce
each $100 of assessed value
in unincorporated areas with that scaled down relative to
the amount of services provided by Wilmington, Newark,
Middletown and other municipalities.
Among the 22 likely
recommendations included in the draft executive summary is
one calling for requiring payment in lieu of taxes by owners
of tax-exempt property used for commercial purposes, which
in the aggregate is currently assessed for $3.6 billion.
Also included is one to
restructure existing tax and sewer-fee exemptions for senior
citizens and first-time homebuyers, which are referred to as
being "over generous," so that they are available only to
"residents that are truly suffering from financial
The draft executive summary
divides the potential recommendations into those that are
considered long-term 'structural' ones and short-term.
The long-term ones are:
• "Set tax level to tie
recurring and predictable revenues streams to support of
basic operating expenses."
• "Develop policies for us of
extraordinary revenue gains." Rather than incorporating
'windfalls' into the general budget, the money would be used
for such things as meeting capital costs, debt reduction,
tax rebates and temporary tax-relief measures.
• "Adopt expenditure
limitations." That would follow the state government's
provision for limiting appropriations to 98% of anticipated
• "Align growth in personnel
costs with fiscal conditions." That would eliminate
automatic merit-system pay increases in favor of determining
the raises on the basis of the current financial climate.
• "Implement 'rolling
reassessment'." After a general reassessment to equate
assessed value with actual market value, a proportionate
number of properties would be reassessed annually in,
perhaps, three- or five-year cycles. The most recent general
reassessment was in 1983.
• "Continue current service
levels in core areas."
• "Seek full cost recovery
[from] discretionary services." They would include such
things as contracted police services, and sports and
recreation leagues. In-kind contributions, use of volunteers
and corporate sponsorships would be possible
• "Expand fiscal-forecasting
tools." Regular analyses of trends would be part of the budget
cycle. The continuing operating costs of policy changes, capital
spending, and land-use agreements would be estimated in fiscal
notes and considered as part of the approval process.
• Tie capital-spending decisions
to the ability to service the resultant debt in annual operating
• Keep capital impact fees for
parks, libraries and public safety up to date.
• "Accept and implement the
recommendations of the recent paramedic service study." They
include vehicle deployment and station location as well as
exploring partnerships with volunteer fire companies, Christiana
Care and other providers.
• "Initiate dialogue to
rationalize delivery of specialized police services." This would
reduce or eliminate duplication of such things as dog squads,
bomb squads, and training academies with state and neighboring
• Issue requests for proposals to
'outsource' specialized services which could possibly be
delivered more economically by the private sector. Some
possibilities for outside contracting which have been mentioned
are operation of the conference center at Rockwood Mansion Park,
the equestrian activity at Carousel Park and the tennis program
at Delcastle Recreation Center.
• Increase productivity by use of
• Tie any increase in the size of
the county workforce to the increase in the amount of revenue to
• "Reduce the size of the current
workforce to bring [it into] line with fiscal capacity." New
facilities, enlargement of County Council and increased level of
services have resulted in enlarging the county workforce by 275
positions between 1999 and 2005 at an average cost of $60,000 in
pay and benefits.
• "Diversify and align revenues
with services provided." Suggested possibilities include a
lodging tax comparable to the one levied by Wilmington,
extending the 9-1-1 fee to include cellular telephones and
charging for paramedic services.
• "Increase property taxes." The
current average property tax bill is less than $1 a day.
Although the required increase in percentage rate would
seem high, the actual dollar amount would be relatively small.
• "Sunset or replace overly
generous tax and sewer exemption programs."
• "Implement a
payment-in-lieu-of-taxes program for commercial properties
currently exempt from paying property taxes."
• "Require fees for services
where appropriate, especially for special events or programs
that are not basic or core services."
• "Encourage the state
[government] to recognize the unique role that New Castle County
and many municipalities play in providing public-safety
services." This would see state support for police services in
areas not covered by the state force in proportion to the number
of officers and calls for service.
Read previous Delaforum article:
Ordinance would repeal tax hike cap
Read previous Delaforum article:
County financial-study panel
looking at a variety of approaches