May 23,  2007

With tax hike in hand, county
finance issue heads to Dover

Asked facetiously after Council enacted the $228.5 million operating budget he proposed and a 17.5% increase in the property tax to finance it if he had decided how large an increase he'll seek next year, County Executive Christopher Coons replied seriously, "Hopefully, none."

He stopped well short of couching that as an election-year pledge, adding that it depends upon several things -- the economy, how effective the spending cutbacks he and his administration have made prove to be, how much discipline the administration and Council display in adhering to the spending plan, and the state legislature's receptivity to the request for fiscal assistance it is soon to receive.

The latter clearly is the immediate key factor.

Coons told Delaforum that his staff is completing work on drafts of a five-item package of proposed state legislation soon to be introduced into the General Assembly. It includes extending the tax on land-line telephones to cellular telephones; a 2% add-on to the tax on hotel and motel rooms; limiting the exemption from the real estate-transfer tax for first-time homebuyers to the first $200,000 of the property's purchase price; increasing the state subsidy for paramedics services or permitting the county to charge for them; and a cable-television tax.

None of those will be an easy sell. Lobbyists reportedly are already at work in Dover on behalf of the affected commercial interests in anticipation of county government's efforts.

Coons declined to predict the outcome of the shift in emphasis in dealing with what he and chief financial officer Michael Strine have been saying for more than a year is a financial crisis waiting to happen. "My hope is that members of the General Assembly will respond to the difficult choices we've made," Coons said.

Council on May 22 enacted the budget, essentially unchanged from what Coons submitted in March, by an eight-to-five vote. Council president Paul Clark and members John Cartier, Penrose Hollins, Stephanie McClellan, Joseph Reda, George Smiley, Jea Street and David Tackett voted to enact both the budget and the tax hike. Voting against them were Councilmen Bill Bell, William Powers, Timothy Sheldon, William Tansey and Robert Weiner.

The one modification came in an amendment to the enacting ordinance which passed unanimously. It had the effect of singling out a Council employee, assistant counsel Leonard Collins, as the first person to feel a direct effect from the new budget and so far the only county employee to loose a job as a result of belt-tightening. Elimination of the only occupied position among several eliminated in the budget will reduce the county workforce to 1,615 from 1,616 and cut Council's authorized spending by $133,104 to $3,380,689.

The budget, which also is an appropriations measure, takes effect with the arrival of the new fiscal year on July 1. Property tax calculated at the new rate will be due on Sept. 28, the last workday of that month.

The new rate in unincorporated areas of the county is 56.14 for each $100 of assessed property value, up from the present 47.78. The rate is scaled down in municipalities depending upon the extent of county services their residents receive. The lowest new rate is 19.49 in Newark and Wilmington.

Before Council voted on the budget, tax increase and four other fiscal measures -- which were enacted unanimously -- and at a finance committee meeting earlier in the day, Smiley, who chairs the committee, said that the fact the measures went through the way they were originally submitted should not taken to mean that Council was not an active participant in the process.

"The [fiscal] '08 budget process did not begin on Apr. 2 (when Council began budget hearings). We've all been looking at ways to generate additional revenue and cut expenses for over a year," he said. "This is the most scrutinized budget we've had. ... This entire Council has been involved. There's no one at this [committee] table who did not make suggestions."

"We have lifted every stone and looked under it. We've been responsible. ... The alternative to raising taxes is cutting government," said Cartier.

Clark said that he searched for an alternative to a large tax increase, but could find none. "I wish somebody could show me an option for [a] 9.9% [increase]. ... I can't do [that] unless I lay off half of the police force," he said. "You can't run a government in 2007 with 1997 dollars."

Tansey praise Coons and the administration for cost-cutting measures, but said he was voting against the tax increase "because they could have pared the budget down more."

Bell said his negative vote was being cast because "it's difficult to support a double-digit tax increase [in light of] the level of services to my constituents." Residents of  area south of the Chesapeake & Delaware Canal whom he represents "do not enjoy the same level of services that they do in other parts of the county," he added.

Sheldon said he "can vote against this with my head held up high" after having made several cost-cutting and revenue-enhancing suggestions which have not been accepted.

Street took his colleagues and predecessor Councils to task for what he said was excessive generosity "when we thought we were rolling in dough." He said he was voting reluctantly for the tax increase and budget because "you have to step forward and do what you have to do to provide [essential] services," but added, "We've come [to the present situation] from a whole lot of fiscal irresponsibility."

The related measures included a $11.6 million capital budget for fiscal 2008, a long-range capital program through 2013, an authorization of sell bonds, and setting sanitary sewer-service rates unchanged from the present fiscal year.

Council on May 22 also approved a set of pay plans for non-union employees which extend automatic merit-system raises based on length of service to 19 years from the present 10 years, while cutting the size of each of  the increases from about 5% to about 2.5%. Present employees will be positioned on the new scales at the step which provides the same pay they are now receiving.

The separate ordinances were approved in a package by a 10-to-three vote with Bell, Smiley and Street in opposition.

The approval came after officials of three of the unions which represent county employees charged that the move would subvert the collective bargaining process. One contract is now being negotiated and the others are up for renewal early in 2008.

Past practice has been for employees who do not belong to a union to receive pay and benefits matching what is decided upon in union contracts. Setting the non-union scales before negotiations, the union officials said, appears to be an effort to pressure union negotiators to agree to the same scales.

Bell took the same position in comments before Council voted, calling the move arbitrary and premature. Cartier responded, "Given the fiscal imbalance in this county it is necessary for us to at least show a direction forward."

When Street argued that the measures seemed to set a course for 19 years, which he said was too far into the future to have an understanding of the implications, Clark replied that it is intended that the new scales will be revised long before then. Meanwhile, he said, they are "the best compromise that could be worked out."

Strine told Delaforum that the Financial Future Taskforce, which he chairs, will reconvene soon to look at various recommendations for overhauling county government's pay and benefits programs. Personnel costs account for about three-quarters of the budget.

Also on the taskforce's agenda, he said, will be consideration of how large a 'rainy day' emergency fund needs to be maintained. The fund is currently pegged at 20% of both the operating and sewer-service budgets.

While dealing with finances on a relatively marco level, a discussion of a mini-level item sparked an unusual display of intramural acrimony during the finance committee meeting. When Tansey requested approval of a $440 travel-expense request to attend a conference in Richmond, Va., Weiner objected on grounds that Tansey did not report on results of a previous trip as required by Council rules.

After the exchange between the two -- who happen to be the only Republicans on the 13-member Council -- became intensely personal, Street figuratively exploded. Chiding his colleagues for bickering about a trivial amount in the midst of having to deal with multi-million dollar issues affecting the entire county, he said, "Either we're committed and dedicated or we're not. We have to stop playing games."

While other Council members sat in stunned silence, Tansey withdrew his request.

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