5/23/2007
Bob Weiner votes against 17 1/2 % county property tax

NCCo OKs tax hike, reduced 2008 budget
Residents will pay more, but county will spend less

By ANGIE BASIOUNY, The News Journal
Posted Wednesday, May 23, 2007

WILMINGTON -- New Castle County residents will pay 17.5 percent more in property taxes in the next fiscal year as part of a $228 million operating budget approved Tuesday by County Council.

Council voted 8-5 on separate ordinances to set the tax rate and the budget, which were virtually unchanged from what County Executive Chris Coons proposed in March.

The plan includes $14 million in spending reductions and $4 million in new revenue through higher row office, land use and community services fees.

Council President Paul Clark and members Stephanie McClellan, Penrose Hollins, John Cartier, George Smiley, Joseph Reda, David Tackett and Jea P. Street cast yes votes.

Council members Bill Bell, William Tansey, Timothy Sheldon, Robert Weiner and Bill Powers opposed the measures.

The increase adds about $60 to the average annual tax bill, raising it from $342 to $402.

"I think we scratched everything, asked every question," Clark said. "I believe this is the right move to spend a few dollars investing in New Castle County. Let's keep it a nice place to live, work and raise a family."

Although the budget tightly reins in spending, dissenters said the cuts aren't deep enough.

Before casting his no vote, Bell said he would have supported a single-digit tax increase and a budget that used more of the county's roughly $80 million cash reserve.

Tansey agreed.

The administration "did an excellent job in paring down the budget, but I believe they still could have gone further," he said. "They did the best job they could."

Council also voted unanimously to adopt a capital budget that slashes $72 million during the next six years.

After the meeting, some council members joined Coons in his office as he signed the ordinances into law.

The measures are effective July 1, which is the start of the next fiscal year.

"Tonight marks an important turning point in addressing New Castle County's financial challenges," Coons said. "I think this is a critical step in restoring [the county's] fiscal health."

Officials had projected the reserves would run out and the deficit would reach $47 million by 2009. The adopted budget, however, will shrink the deficit to $15.7 million by 2009, and the reserves would last until 2011.

The county's financial problems can be traced to the 1990s, when the state created a lucrative new revenue stream in the form of the real-estate transfer tax -- a one-time fee paid when houses are bought and sold.

A housing boom through the past decade helped generate millions from the transfer tax, allowing property taxes to remain low and helping elected leaders sock away millions in reserves.

But in the past several years, expenditures have spiked while revenues have grown at a much slower rate, opening up an annual deficit in the operating budget. The county has been spending down its cash reserves to cover the difference.

Meanwhile, the transfer-tax revenue has declined sharply and is expected to remain flat in the next few years, according to state projections.

Council members McClellan, Street and Smiley said the government only has itself to blame for the deficit.

They also vowed change.

"I'm going to support this [budget] tonight, but I'm not going to support this or nothing like it in the future," Street said.

In separate business, council also approved ordinances that would save about $500,000 in the coming year by restructuring the pay of about 250 employees not covered by union contracts.

The changes would reduce and spread out the 5 percent step increases customarily given to those workers in the first 10 years of their employment. It also would temporarily halt their additional 3 percent yearly increase.

Salaries, wages and benefits for the county's 1,616 employees account for 75 percent of the government's costs.

Several union leaders argued that changing nonunion pay now sets the wrong tone for next year's collective bargaining negotiations. Nonunion workers traditionally receive the same raises given to union workers.

Street, Smiley and Bell sided with the workers and opposed the new pay plan.

"Pay is something we definitely have to take a look at," Bell said. "But to try to implement this during the budget process, I don't think the time is right."
Contact Angie Basiouny at 324-2796 or abasiouny@delawareonline.com.

THE NEW TAX RATE

CURRENT RATE: 47.7 cents per $100 of assessed value

RATE AS OF JULY 1: 56.1 cents per $100 of assessed value

INCREASE: 17.5 percent, or $60, for average tax bill (excluding senior exemption)

EXAMPLE: Tax bill for $400,000 home will be $643

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