City presents budget proposal
Tax hike unlikely, but stormwater fee and other charges sought
By JOSH SHANNON firstname.lastname@example.org
For the first time in several years, it appears likely Newark’s 2018 budget will include no property tax hikes or increases in the water, sewer and electric rates.
However, residents could still face a number of new fees and charges, most notably the long-discussed monthly stormwater fee, which for the average homeowner would be equivalent to a 7 percent tax hike, officials said this week.
On Monday, residents and city council members got their first look at the budget proposed by city administrators. The proposal may change based on council feedback before it is approved in November or early December.
Under pressure from council to avoid a tax hike, city administrators took a different approach than in past years when they proposed large tax increases and often made cuts later in the process.
“We cut first,” Acting City Manager Tom Coleman said.
Coleman’s budget relies only on the stormwater fee. He recommended a 2 percent tax increase to help offset cost increases, reduce the need to rely on utility transfers and keep up with inflation; however, the budget is balanced without the tax hike.
On Monday, the majority of council members refused or were hesitant to support a tax hike.
“I will not vote for a tax increase, period,” Councilman Jerry Clifton said. “The city has been hammered over the last three years.”
Taxes have increased nearly 20 percent since 2010. An additional 9 percent hike was proposed last fall, but was dropped after council balked.
Even Mayor Polly Sierer, who last year stated her belief that yearly tax increases are necessary to maintain the city’s high level of services, said she won’t support a tax hike this year.
“These other increases you’ve proposed are more important, more critical and more fair,” Sierer told Coleman.
The stormwater fee, which has been discussed for more than two years, is finally set for a vote this coming Monday. If approved, residents will pay between $1.77 and $5.31 each month — based on the amount of impervious surface on their property — to fund the city’s stormwater operations and fix aging infrastructure. Large commercial property owners will pay even more.
Coleman said the stormwater fee is more equitable than funding stormwater improvements through a tax increase, because even tax-exempt properties — i.e. the University of Delaware — will pay the fee.
Coleman also proposed monthly service fees of $1 each on water, sewer and electric bills as a way to recoup some of the fixed costs of providing the services.
“Technology, the conservation of resources and education has led to lower consumption by those we serve, resulting in the inability to properly recover the revenues necessary to meet our expenses,” Coleman wrote in his proposal. “Infrastructure needs to be there regardless of usage levels. Alternative energy users still rely on the city’s grid.”
The fee on the electric bill would be used to increase the city’s subvention payment to Aetna Hose, Hook and Ladder Company from $74,000 to $224,000. Aetna is a mostly volunteer fire department and has seen its calls for service increase while its funding has declined.
City officials proposed a similar fee to help Aetna two years ago, but council did not approve it.
Another proposed change involves the way homeowners are charged for city garbage collection. Coleman proposes adding a trash collection fee onto the monthly utility bill, while decreasing the tax rate proportionally.
The result would be that homeowners with a high property assessment would end up paying less overall, while residents with a lower assessment would pay more. Coleman explained that approximately 20 percent of residents’ tax bills aren’t high enough to cover the $315 cost of garbage collection, let alone the other city services residents receive.
Officials are also exploring ways to get more money from UD, such as having the university assess a fee on all students to help cover their impact on city services. Another idea is charging a $1 to $2 venue service fee on each ticket UD sells for its various events.
Both proposals rely on UD’s approval. Officials said that under the Assanis administration, UD has been more willing to chip in, but Sierer noted the per-student fee would be “an incredibly hard sell” based on conversations she has had with university administrators.
The city is also weighing charging residents a small fee for paying their utility bills via credit card, which costs the city money due to fees from credit card companies.
One of the biggest changes in Coleman’s budget proposal is the way it funds the capital improvement plan, which includes expensive projects meant to serve the city for many years. Rather than paying for the projects with cash in this year’s budget, the city would use bonds that could be paid off over a number of years.
“We shouldn’t be using today’s money to fund a 50-year project in one shot,” Finance Director David Del Grande said.
The CIP is approximately $13 million and under the proposal, $8.25 million would be financed through bonds, and $1.5 million would be funded with current revenue, with the rest covered by grants and other services. Last year’s budget funded $4.1 million of the CIP with current revenue.
Doing so would require taxpayers to approve a referendum authorizing the city to take on debt. The city is already planning a referendum on the Rodney stormwater project next spring, and the CIP bonds likely would be placed as a second question on the same ballot.
The next budget hearing is set for 6 p.m. Nov. 6 at city hall.