tax-rate cap is
start of a challenging process
a successful scrimmage behind them, Chris Coons said he's ready
to lead his administration in a "challenging march down the
field." Carrying the sports analogy he used during his monthly
meeting with business leaders a bit further, it's a fair
assumption that whether the fans' cheers or the boos prevail
will determine if the quarterback and some of the team will have
their contracts renewed when they run out next year.
To be sure, the challenge the
county executive faces is not a game, but a serious contest to
determine how Delaware's most populous county is governed and
what services its government is able to provide in coming years
for its more than half million residents.
Coons was obviously pleased at
the meeting the morning after a majority of County Council
agreed that he should not be bound by an arbitrary limit on how
property-tax increase he can seek when he presents his fiscal
2008 budget. "We (the administration) now has the ability to put
together a budget that might include a tax increase of more than
5%," he said.
The 'might' in that comment is
clearly academic. Coons did not react when Michael Strine, his
chief financial officer, reiterated what he has said frequently
during the past several months: "There is no possible scenario
in which Council will not have to enact a tax increase in excess
According to hypothetical
scenarios posted on the county website, Strine estimates there
would be a $280 million deficit accumulated between now and
2012. With 5% increases each year, the shortfall would still
amount to nearly $160 million.
Because county and other local
governments by law cannot deficit spend, those figures translate
into a sequence of obviously unacceptable cutbacks that would
eliminate the Department of Community Services -- which operates
the county's parks and libraries -- by 2010, the Office of
Emergency Management by 2011 and the Department of Land Use by
Noting that he "already [is]
beginning to get panic calls," Coons stressed the obvious at the
meeting on Jan. 10: "They're just hypotheticals to show the
extremes of what could happen. They're not actual proposals this
administration would make."
Still, he added, "there's no
scenario that works easily."
He also cautioned that the
proposed property-tax increase "should not be taken out of
context." As previously reported, it is one of several short-
and long-term proposals put forth by the Financial Future
Taskforce, a proverbial blue-ribbon panel convened jointly by
the administration and Council.
The taskforce has yet to complete
its work. It currently is awaiting results of a consultant
study of how pay and benefits of the 1,650 county employees
compare with rates for comparable jobs in both the public and
private sectors, and of a professional survey of residents aimed
at determining which government services they value and for
which they are willing to pay more.
Those clearly are key components
of any comprehensive approach to dealing with the fiscal
situation. About 75% of the current $230 million budget goes
to cover personnel costs.
Topping the list of desired services is providing for public safety,
which accounts for 48% of spending. "Everyone wants more cops
and paramedics," Council president Paul Clark said. "We wouldn't
have a secure [area] if we didn't have a county police force."
The property-tax increase and
expected increases in the fee structures for some county
services are required, taskforce members agreed, if the General
Assembly is to seriously consider any request for state
financial assistance for the county.
Delaware and Mississippi are the
only two states which do not have some form of revenue sharing
with local jurisdictions, according to former Councilwoman Karen
Venezky, who sponsored the resolution establishing the taskforce
and co-chaired it with Strine.
Coons told the business leaders
meeting that he has had a preliminary conversation with Governor
Ruth Ann Minner, but that no specific proposal for aid has been
made. In any event, it would not help ease the situation in the
coming fiscal year. The county's fiscal 2008 budget has to be
enacted before June 1; the Assembly traditionally does not act
on spending legislation until just before it adjourns on June
Removing the 5% cap on a
property-tax was largely an academic exercise. It just limited
what the executive could propose; Council was not restricted on
what it could enact. But the 10-to-three vote to repeal and,
more significantly, extensive discussion at the finance
committee meeting where the measure was considered prior to
Council's plenary session provided a good measure of how Council
members feel about the issue.
Clark and George Smiley, who is
acting chairman of the committee and sponsored the ordinance,
were highly supportive. "A lot of thought and work went into
this. ... This stellar blue-ribbon panel has unanimously
endorsed lifting the cap," Smiley said.
"We have a very low marginal tax
rate. New Castle County has been a bargain; it will remain a
bargain," said John Cartier.
At the opposite end of the scale
was William Tansey who said flatly, "I don't think we ought to
raise taxes at all."
Jea Street and Timothy Sheldon
questioned the justification for seeking higher taxes citing,
respectively, high-ticket spending in the past and alleged
neglect of several cost-saving options. "The gravy train has got
to jump the track," Street said.
Steering a middle course was
William Bell who agreed that lifting the 5% limit was probably a
good idea under present circumstances, but said he was
uncomfortable with not having any limit. He suggested that 10%
might be appropriate. However, he did not attempt to amend the
ordinance and when it came to a vote supported it.
Still to be seen is what
will happen when Council delves into the arcane world of public
finance and holds department-by-department hearings on the
budget proposal which Coons submits. For the past several years,
the voluminous legislation has moved through the process with no
significant changes or effort to make any.
"How can you vote against
something if you don't have an alternate plan?" Sheldon asked.
"A lot of decisions were made in the past that bound us for
years to come," David Tackett said.
Also uncertain is what will
happen with other proposed legislation to implement some or all
of the taskforce's short-term recommendations.
Recognizing that a precipitous
drop in revenue from the real estate transfer tax and related
recorder of deeds fees was the main cause of an accelerated
depletion of accumulated reserves used by the previous
Gordon administration to stave off any tax increase during its
James Wolfe, president and chief
executive officer, Delaware State
Chamber of Commerce and a member of the
taskforce cautioned against dependence on a volatile and
uncertain source of revenue.
"This county operates on a hope
and a wish that you're going to sell more houses. If you tried
to run a business that way, you wouldn't make it," he told the