likely to come next year
owners in New Castle County could be looking at a potential tax
increase as high as 50% if current trends in the national and
local economies continue.
administration is several
weeks away from completing work on its proposed operating budget
for the fiscal year which begins next July 1 and even further
from presenting the request to County Council next March. County
Executive Christopher Coons said that, while county government's
fiscal situation is serious, there is no consideration being
given at present to accelerating the budget-approval and
"This is not today a
crisis. ... We are not at that point yet," he said at a press
conference he called on Nov. 14 to provide a forum to announce
several internal cost-cutting measures in response to a
precipitous drop in county revenue.
Later that day chief
administrative officer Jeffrey Bullock, the second-ranking
member of the administration, stunned officers of area civic
organizations with the 50% estimate while responding to a
question about what it would take in the way of a property-tax
increase to recover the 'lost' revenue while maintaining public
services at their current levels.
Coons added "about
That figure is half the
amount that officials say is the average residential tax bill in
the unincorporated areas of the county. Residents of
incorporated municipalities pay lesser amounts determined by
rates scaled down to reflect public services provided by local
governments. The tax on commercial properties is levied at the
a tax increase of that
magnitude, or anywhere near it, would be politically feasible,
County Council president Paul Clark said Council would likely be
reluctant to acquiesce to any tax increase. "I don't see this
Council raising [the tax rate] because it is the right thing to
do. ... There has to be a mandate [from the public]," he said.
He noted that a
proposal to expand the county police force and pay for
additional officers and civilian personnel with the equivalent
of a surtax was deemed untimely in the light of the deteriorated
economy and withdrawn despite the fact that public safety is
considered the top priority among county residents.
As previously reported,
the administration and Council members are going to seek a
mandate at a series of public meetings in each of the 12 Council
districts soon after the turn of the year. Attenders at those
meetings will be asked what services "we can afford and what
they're willing to support," Coons said.
Meanwhile, he said,
new cost-cutting measures are required to respond to an
operating deficit this fiscal year presently projected to amount
to $29.9 million. Even so, the cuts he announced would cover
only $5 million of that shortfall, he said.
The shortfall was
projected to be $17 million when the current budget was approved
in March. That would be covered by dipping into budget reserves
accumulated in past years. The larger gap is now expected to cut
those reserves by nearly half, to $34.2 million. At that rate,
they would exhausted during fiscal 2010, two years earlier than
County government is
almost totally dependent on the real estate and housing sectors.
The real estate transfer tax, second to the property tax as a
revenue generator, is now estimated to produce $20 million this
year, less than half its $40.5 million peak in fiscal 2006,
during the real estate boom.
Although the federal
government has come to the aid of banks, mortgage lenders and
others in the financial sector and is considering helping the
troubled automobile industry, there is no likelihood of a
comparable bailout for local governments, Coons said. With state
government's own budget woes, members of the General Assembly
"will be less inclined to be helpful," he added.
There is little
consolation to be taken from the fact that local governments all
over the country are hurting.
The measures that Coons
• A hiring freeze for
non-essential positions -- exempting only 'front-line' jobs in
public safety, Coons said. County government currently has about
100 vacancies in its workforce.
• A limit on overtime
except to meet "approved critical needs."
• Reductions in
spending for capital projects, of which there are few in
• Limits on all travel
• Requiring prior
approval for all requests for contractual services.
• Reductions in
purchases of both new and replacement major equipment.
Those cuts, Coons said,
"are only a first step in addressing the severe revenue loss we
have experienced and further measures will be coming in the
weeks ahead," Coons said during his prepared remarks.
"When the next round
comes, it will be a reduction of [public] services because there
is no other option," Bullock told the civic association
He and Coons both
expressed reluctance to dip into the so-called 'rainy day'
emergency fund -- currently $31.9 million -- or to lay off
county employees. Both indicated, however, that either or both
could occur if conditions do not improve.