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A
three-part proposal from a subcommittee headed by City
Councilman Michael Hare, which sparked the most interest and
support from the full panel as it sought to complete its work in
time to allow the General Assembly to act before calling it a
session at the end of June, called for:
hImposing
a $1-a-month 'water availability' surcharge on everyone who
benefits from the water reserved in the reservoir behind
city-owned Hoopes Dam.
hIncreasing
rates charged to both city and suburban customers of the
Wilmington water system, which presently are by far the lowest
in New Castle County.
hCharging
a fee for 'hosting' the Delaware Solid Waste Authority's Cherry
Island landfill, which would amount to $1 a month per business
and residential customer of private trash collectors who use the
dump.
The
taskforce kept the possibility of recommending a city lodging
tax on hotel bills and an admissions tax on tickets to
entertainment events on the table while eliminating, or at least
putting off for the time being, such things as restructuring the
wage tax into a two-tier system, sharing in revenue from state
franchise taxes and fees, levying a 'public safety fee' in lieu
of property taxes on tax-exempt property owners and instituting
some form of casino gambling.
There was strong support among
taskforce members for keeping the panel intact to evaluate those
and other ideas for possible future adoption after it files its
initial report. It has been impossible in the short time the
taskforce has existed to delve into the ramifications of such
complex issues as revenue sharing, said Fred Sears, its
co-chairman.
Those
ideas presented by Hare's subcommittee did not pass muster
without some objections at a taskforce meeting on May 15, but
there seemed to be a general feeling around the table that they
probably stand the best chance of getting support from
legislators wary of political fallout from placing a real or
perceived burden on voters who do not live in the city,
State
Representative Wayne Smith, who is a member of the taskforce,
said that only a solid bipartisan bloc of lawmakers from city
and other upstate districts will be able pass enabling
legislation and that support will not be forthcoming unless
those from the suburbs see no impact on their constituents.
Suburbanites, he said, will not accept any "impact [on
themselves] to bail out the city of Wilmington."
"The city
has assets [it is] not getting a return on. The city has unique
things that benefit the whole county," said Peter Ross, of the
University of Delaware.
Smith
said only a single package of acceptable proposals stands a
chance. If such things as an increase in the city wage tax on
nonresidents who work in Wilmington or a lodging tax which would
be opposed by seashore tourist interests are included, "the
whole thing goes down," he said.
Downstate
legislators "will accept anything we agree on -- so long as it
doesn't affect [their areas]," Smith said.
Smith,
who represents a Brandywine Hundred district, is Republican
majority leader in the House of Representatives. His counterpart
in the state Senate, Democrat Harris B. McDowell, has a district
which includes both city and suburban precincts. McDowell also
is a member of the taskforce but was not able to attend the
meeting.
State
legislation is necessary because Wilmington and other
municipalities in Delaware do not have autonomous home rule.
Ross said
the city has to go to Dover with a single package of proposals.
"June gets very complicated down there. Simple and
understandable is the only way to do it," he said. "It has to be
done this June because next June it won't get done." That was a
reference to the fact 2004 is an election year.
Hare said
that his group's proposal meets both Smith's and Ross's tests.
What's
more, when taken together the ideas will generate sufficient
revenue to eliminate what Mayor James Baker has called
'structural defects' in the city's revenue structure, which is
now all but totally dependant on wage and property taxes. They
will do so, Hare said, at negligible additions to costs which
still will be below par for comparable services elsewhere.
A
municipal consulting firm has said Wilmington presently needs to
take in an additional $5 million annually and that could double
by 2007. Baker has said that existing tax rates are maxed out.
Hare's committee estimated the water surcharge would yield
between $1 million an $1.5 million a year and the trash fee
between $3 million and $5 million annually. The amount realized
from higher water rates, would, of course, depends upon where
they are set.
Governor
Ruth Ann Minner, who established the taskforce in response to a
request by Baker, has pledged support for the mayor's effort to
put the city on more solid financial ground despite concurrent
pressure to deal with the state budget's 'structural defects'.
Smith
questioned what effect the water-availability surcharge would
have on pending legislation, of which he is a sponsor, to
establish a water self-sufficiency for northern New Castle
County to counter future droughts. That measure, he said, was
"carefully crafted to balance different interests" and injecting
a significant new component could upset the balance.
Increasing the water supply in Hoopes Reservoir is a key
component of that plan. It also calls for reuiring water
suppliers to charge increasingly higher rates to customers who
use larger amounts of water. "To a lot of ratepayers, it's going
to look like a second hit," Smith said.
Ross said
it could be 'sold' as a form of insurance and would be justified
because a city asset is being used to provide assurance against
the effects of a water shortage. People should be willing to pay
for having a reserve water supply, he said. "It's like
automobile insurance -- I hope I don't have to use it, but it's
nice to know it's there."
A fee for
having the landfill within the city limits drew more stringent
objection from the waste authority. In a detailed memo, chief
executive officer N.C. Vasuki argued it could put the
quasipublic authority at a competitive disadvantage with private
landfill operators. "Any direct payment of a 'host community
fee' to the city creates both legal and financial quagmires," he
wrote. Among other things, the authority's present fee structure
is set until mid-2005.
Hare
countered that the city is adversely affected by the landfill at
its northeaster border and will be even more so if present plans
to expand it by authorizing it to grow to a higher level.
Taskforce co-chair Scott Green agreed, saying there is 'a direct
cost" to the city as as result of what could otherwise be prime
waterfront property on the Delaware River being rendered
unavailable for economic development and, as a result "there
ought to be some reasonable compensation."
Hare said
the city, in any dispute with the waste authority, holds a
political trump card. "There ought to be public support [for
paying an additional charge] to make sure the landfill stays
where it is instead of going somewhere else [in the county[," he
said. "That hill is going to be there for a long time [and] we
ought to get some money out of that hill."
It was
agreed that a city lodging tax would be relatively painless,
especially if a way could be found to collect it just on stays
during the workweek when hotels in the city are used mostly by
business travelers on expense accounts. Similarly, there was
support for an admissions tax with the caveat that it be charged
only on tickets costing more than $5 or $10 to avoid burdening
suppliers of low-cost entertainment.
On the
longer-range issues, such as piggybacking on the franchise tax,
it was pointed out that even something that seems to be minimal
tampering could have unintended but serious consequences.
State
Secretary of Finance David Singleton said that great effort was
made to obtain agreement from major corporations chartered in
Delaware to accept Minner's proposal for a 17% increase in the
franchise tax and fees. "They've gone along [with that] like
good soldiers ... but who knows if [they would if] it went
higher," he said. "It's not something we'd want to do in a hurry
until we see what all the implications are."
But, he
added, the state administration would be willing to consider a
specific proposal, such as one by former Wilmington mayor Hal
Haskell that the city, in its role as New Castle County seat,
collect related charges for recording incorporation documents
and providing similar services.
Lieutenant Governor John Carney said that and other forms of
revenue sharing might seem to be an easy way to solve
Wilmington's problems but that any sharing arrangement has to be
designed in way that provides for equitable treatment. "What's
done for Wilmington also applies to Selbyville," he said.
Municipalities and political subdivisions have different levels
of financial needs and some have no needs at all. In the latter,
there would be a natural temptation, for instance, to use shared
state revenue as a means for reducing local taxes.
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