Newark proposes tax, fee increases
Newark officials are proposing a 4 percent tax hike in 2019, as well as increases to water and sewer rates and the stormwater fee.
If approved by city council, the increases would cause the average resident to pay a combined $69 more per year.
The proposed increases were announced last week when Acting City Manager Tom Coleman and Finance Director David Del Grande unveiled their $94.6 million budget proposal.
“Expenses have been growing at levels exceeding inflation, and revenue over the years has not been keeping pace with expenditure growth,” Del Grande said.
Under the proposal, taxes would increase 4 percent, the water rate would increase 4.5 percent, the sewer rate would increase 3.8 percent and the stormwater rate would increase 20 percent. The electric rate would remain unchanged.
Some of the increases were expected following the passage of the $27.6 million referendum in June. The city will use loans and bonds to pay for the Rodney stormwater pond/park and other large projects, and then increase taxes and fees over the next several years to pay off that debt.
However, only a quarter of the increases being proposed for 2019 are directly attributable to the referendum, Del Grande said. Much of the referendum impact is to the stormwater fee, which will be used to pay the debt service on the Rodney project.
The rest of the increases are necessary due to rising operating expenses, including personnel costs, which will go up 5.1 percent – $1.6 million – due to previously approved union contracts and an increase in healthcare costs, Del Grande said.
Officials are proposing adding one position, bringing the city’s total number of employees to 250. The added city planner position is needed to deal with an increase in development projects and planning commission initiatives, Coleman said.
Del Grande argued the city has cut as much out of the budget as possible.
“There’s really no fat in the budget,” he said. “All of our departments are running as lean as they possibly can.”
Meanwhile, the city’s 3-percent tax on hotels, which was approved Monday night, will bring in $675,000. The lodging tax eliminates the need for an additional 10 percent tax hike, Del Grande said.
City council will hold a public hearing on the budget Nov. 5, with a vote likely to come in early December.
The budget could change, though, as council weighs a number of other proposals and questions.
A major decision – “the big bear in the room,” as Councilman Jerry Clifton phrased it – is how to fund the successor to the Downtown Newark Partnership. Council approved the new nonprofit organization last month and committed to contributing funding but did not decide on an amount.
The group is asking for $150,000, but there is no money allotted for the group in the current budget proposal. The DNP has $84,000 in reserves that can be transferred to the new organization, but the city would have to find a way to come up with the rest of the money.
“If we want to avoid additional rate increases, we’ll have to trim something in the budget,” Coleman said.
Mayor Polly Sierer, who is leading the effort to create the new group along with the University of Delaware’s Dan Rich, said the city needs to find the money.
“Bottom line is I want to see the money in the budget,” Sierer said. “I want you to find a way to put it in there.”
Councilwoman Jen Wallace, however, was adamant she wouldn’t support a tax increase to fund the DNP successor.
“I don’t want to see a tax increase to pay for that, quite bluntly,” Wallace said. “I know my residents are not going to like that.”
Clifton suggested the city consider giving management employees a cost-of-living adjustment. Management employees typically get a yearly 4-percent step increase until they reach the maximum salary in their pay grade, but the budget provides no additional increases this year.
Clifton – who just last year advocated laying off several management employees – said providing a cost-of-living adjustment could aid employee retention.
“To me, it’s cheaper to pay a COLA than go through the hiring process, bring someone in with no institutional knowledge and repeat the process three or four years later,” he said, noting that many city employees earn less than what they could in the private sector.
Mayor Polly Sierer proposed adding money to the budget for a study to look at whether Newark needs more police officers, a study that would cost between $50,000 and $75,000.
Sierer noted the last study was done in 1987.
“Our city has grown significantly since then and in a variety of ways. It is going to continue to grow,” she said.
Meanwhile, council is also considering a number of options to cut costs or increase revenue.
One proposal looks to recoup some of the fees the city pays when customers pay bills using a credit card. Credit card companies take a small percentage of the amount paid, which costs the city approximately $1 million per year, Del Grande said.
Of that, $300,000 comes from parking fees paid with a credit card, and the rest comes from utility bills and other payments. The city’s largest utility customer, UD, accounts for $400,000 in credit card fees.
In the past, council has been hesitant to charge customers a fee to use a credit card, but Coleman suggested the city could implement a service charge on large credit card payments, which would recoup some of the costs but also avoid affecting typical residents.
“That wouldn’t be unique to Newark,” he said. “I don’t think you can pay your tuition at UD with a credit card without paying a service charge.”
Another proposal is to reconsider the parking validation system, which costs the city $100,000 in lost parking revenue each year. When a business gives a customer a parking voucher, the business pays half the cost, with the city writing off the other half.
Councilman Chris Hamilton said he recently went to a Main Street coffee shop, bought a $2 iced tea and was handed $3 in parking vouchers.
“They tossed them out like candy,” he said, adding that he’s heard some students trade parking vouchers like currency. “I got paid to park in our lot. I find that program interesting.”
Several council members said the city should re-examine a proposal to raise parking rates, which was rejected earlier this year after opposition from business owners.
“We’re looking at rising expenses, and yet we haven’t raised our parking rates since, I think, the Model T,” Hamilton said. “I’m a little hesitant as a councilperson to start approving tax increases and start approving all these other revenue streams that come on our residents when we’re leaving money not collected.”
Since 2015, the city has wrestled with how to increase its contribution to Aetna Hose, Hook and Ladder Company, which faces budget issues and has asked Newark for more support. Del Grande’s latest suggestion is a public safety fee on building permits. That money could be split between Aetna and the Newark Police Department, he said.
The city is also considering charging for bulk trash pickup – extra pickups for large items like couches – which is currently provided for free.