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NCCo transition team dissident is right -- budget ax must finally fall

The News Journal

A scathing minority report from a member of the county executive's finance transition team says New Castle County government is basically broke.

The opinion was authored by financial services planner and well-known media commentator Dace Blaskovitz.

As a matter of full disclosure, Blaskovitz and I do a monthly political radio commentary on WILM1450/WDOV1410. But this report was born from his service on New Castle County Executive Paul Clark's Finance Committee transition team. Blaskovitz is also a member of the county's Pension Board and the Wilmington Economic Financial Advisory Committee, the city's version of the state's DEFAC budgetary advisory group.

Blaskovitz was joined in his minority opinion by former state House majority leader Wayne Smith. The other members of the committee are J.J. Davis, former state budget director, now with the University of Delaware; Pete Ross, former state head of the Delaware Compensation Commission; and Jill Floore, finance director for the Red Clay Consolidated School District.

The majority report from the team's three Democrats, scheduled for release Friday, is expected to call for "revenue enhancements," also popularly known as tax increases.

Smith is a Republican and Blaskovitz an independent.

Debt doubled in five years

This is the first public indication that, in order to survive, the county needs more tax increases. County property taxes have already been hiked by 25 percent by former executive Chris Coons, and the county work force has taken a 5 percent cut in pay.

Blaskovitz said that in order to meet the upcoming budget without raising taxes again, some 125 workers would need to be laid off or vacant positions not filled.

In addition, the county's debt has more than doubled in the last five years. Overall, property taxes have increased 55 percent since 2005 and sewer rates jumped 60 percent. Even so, according to Blaskovitz, "general government spending outpaced revenues." Since 2000, pension assets increased $9 million, "while the county's unfunded accrued actuarial liabilities increased over $140 million. Retiree health cost is nearly $250 million," Blaskovitz wrote.

"So after years of delaying executive decisions hoping an economic bounce would magically undo the dilemma, dwindling reserves are now forcing a day of reckoning."

This is an economic, and political, blow to the very young administration of Clark, who set up the finance transition team to evaluate the county's financial health. It's not good.

Clark has said he hoped not to have to raise taxes and operate the county on what surplus remains from the housing and real estate transfer-tax boom of the early part of the past decade.

That, according to Blaskovitz, now doesn't appear possible.

'We should not raise taxes'

"Here is what we should not do," Blaskovitz wrote. "We should not raise taxes, nor raise fees, nor raise service charges. In my opinion, it is unconscionable for 'revenue enhancements' to even be mentioned in our report. ... Like a hefty chunk of the local households who have already done it, New Castle County government needs basic, immediate belt-tightening. More than ever, leadership is needed."

But, of course, with most of New Castle County's work force represented by unions, that's much easier said than done.

Clark knows as much and is unlikely to follow the majority report of raising taxes, given the most recent ones from the Coons administration.

Blaskovitz said that when he first heard of the tax-increase proposals, he was going to resign from the transition committee. But Clark's chief of staff, Dennis Phifer, told him that instead of resigning, he should issue a dissenting opinion.

Just what effect Blaskovitz's report will have on Clark's and County Council's decisions on finances remains unknown.

But if the county's political history is any litmus test, I'd say not much at all.

Taxes may not go up in this budget cycle, but probably will have to in the 2012-13 fiscal year.

Meanwhile, Blaskovitz and his comrades are going to have a hard time persuading County Council and Clark to lay off 10 people, let alone 125.

But Blaskovitz is right. Spending and public employee benefits must and eventually will be reduced.

Exactly when remains the $64,000 question.

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