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March  23,  2011

Proposed county budget seeks
long-range structural change

County Executive Paul Clark warned that county government will be bankrupt by 2014 if it does not implement what he called "permanent changes to the way we do business."

While presenting a proposed $164 million operating budget to County Council Clark said, "New Castle County is not broke; New Castle County has not been mismanaged." But, he added, "we remain in a structural deficit ... that exists because we continue to spend more than we take in as costs continue to rise."

The problem is "serious enough that [it] threatens the long-term health of this government," he said. "I believe the budget I am recommending tonight is the first brick in the foundation of change."

The $164 million spending plan is down nine tenths of 1% from the $165.5 million county government expects to spend in the current fiscal year, which ends on June 30, according to acting chief financial officer Ed Milowicki. Those figures have been adjusted to include motor vehicle fleet expenses previously included in the capital budget and exclude the cost of providing school crossing guards, which is financed through a separate dedicated tax.

Clark stuck by his intention, previously reported by Delaforum, to not seek an increase in the 70.06 property-tax rate. The rate -- scaled down for properties in incorporated municipalities depending upon the extent to which they use country-provided services -- is applied to each $100 of assessed value.

Instead he proposed several ways to cut costs, the most significant of which will require $2.4 million in concessions by the labor unions which represent the majority of county employees. That would be half of the 5% pay cuts or their equivalents that most have taken during the previous two years. Contract talks are scheduled to get under way soon.

"Whatever concessions we reach with our unions, I, along with my appointed staff, will accept the same reductions," he said. He did not specifically refer to employees not represented by unions, but they are expected to be included as well.

Without being specific, Clark said he will "be offering incentives for employees to partner with us to reduce costs." While doing so, he also hinted in reverse English that he intends to accompany that proverbial carrot with a proverbial stick by adding, "I hope we can do that without any layoffs."

Clark drew the only round of applause from the audience during his budget address on Mar. 22 when he praised the county workforce. "They do a terrific job, but the realities that have hit the private sector workforce are now here in the public sector," he said.

He also said 25 authorized but presently vacant positions will be eliminated and that money for 51 which are not now filled but will remain on the books will not be provided. The proposed budget provides for 1,564 positions, down from a peak of 1,684 in fiscal 2005 and the lowest number since fiscal 2001.

In proposing a $69.1 million budget to finance the county's sanitary sewer system, Clark said he will seek a 3.9% increase in sewer fees. He called the resultant increase in cost "nominal for the homeowner." Moreover, he added, it can be offset by taking measures to conserve water. The fee is pegged to the amount of water a household uses.

Also proposed was a $46 million capital-spending budget, which adds no new projects but continues "commitments previously made" such as constructing a new branch library in Claymont and renovating the one in Bear and providing body armor for county police officers.

Unlike in each year during the past decade, the proposed fiscal 2012 budget does not envision dipping into the budget reserve to cover what otherwise would be an operating deficit. The reserve is expected to stand at $44.3 million on June 30, down from $50 million a year earlier.

Clark described the proposed budget as "based on reality, not hope."

"I do not see our economy coming back quickly," he said. Nor, he added, does he expect financial assistance from either the state of federal government. "There will be no windfall of unexpected revenue," he said.

Looking to the future, clearly the most significant change that Clark proposed was earmarking revenue from the tax on real estate transactions to finance economic development. "We must take action to grow our economy through jobs," he said. "In the near future you will see me bring a proposal to Council to do just that."

County Council will begin a department-by-department review of the proposed budget with the first of a series of open-to-the-public hearings on Mar. 28. If past practice is any guide, the 13-member legislative body can be expected to enact the budget without any substantive changes in late May, a little over a month before the new fiscal year begins on July 1.

Meanwhile, Clark and members of his administration will host a series of public meetings in communities around the county.

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Read previous Delaforum article: Clark rules out possibility of a property tax increase

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