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"We can't
tax our way out of it or cut our way out of it," Baker said at a
press event on Mar. 31 at which he released a grim report on
city's financial future and Governor Ruth Ann Minner pledged her
support for steps to prevent its prognosis from coming to pass.
The
report, by the Wilmington Economic & Financial Advisory Council
with technical help from Public Financial Management, a
Philadelphia-based consultant to public entities, said that , if
present trends continue absent any action to address 'structural
defects' in its revenue-generating capacity, Wilmington faces a
budget shortfall of nearly $5 million in the fiscal year which
begins July 1 and that will grow to $12.1 million by fiscal
2007.
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Even with a best-case scenario
involving a reversal of the present straits in the
national economy, there will still be deficits of $3.4 million
in the coming fiscal year, growing to $5.2 million in the
following four years.
"The bottom line is that the city of
Wilmington faces the same sort of problem that we do at the
state level," Minner said. "The [financial] health of the city is an
integral part of the health of the state."
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Flanked by Mayor
James Baker (left) and City Council president Ted Blunt,
Governor Ruth Ann Minner signs an executive order
establishing a task force to recommend new sources of
revenue for Wilmington. Seated behind them are Fred Sears
(right), who will co-chair the task force, and Michael
Hare who will be City Council's representative 0on it. |
As she
has said with regard to state finances, "quick fixes and
gimmicks will not work."
By
executive order, she established a 23-member task force composed
of representatives of the public and private sectors. It is
charged with evaluating the council's report and recommendations
and presenting its own proposals to the governor and General
Assembly by May 31. That, Minner said, would give the
legislature time to act so that the new revenue sources are in
place for the coming fiscal year.
She
pledged her full support for whatever proposals the task force
developed, but declined to speculate on what they might be or
comment on the six put forth by thee advisory council. It said
if all were adopted they would generate annual revenue of
between $5.7 million and $21,5 million, depending upon which
options within each method are selected.
The most
radical idea is to require tax-exempt entities located within
the city to make payments in lieu of property taxes. No taxes
can be collected on about 42% of the city's total property
value. While their owners would keep tax-exempt status, they
would be assessed mandatory fees equivalent to part or all of
what they would have paid if taxed. Affected could be such
things as state- and county-owned property, schools, hospitals
and non-profit institutions. The report notes several other
cities where such payments are required, but pointedly avoids
any mention of property owned by religious institutions, which
traditionally have been the stumbling block on which such
proposals fall.
Also
proposed are new city taxes on cigarettes, hotel rooms, parking,
event admissions and natural gas. Under Delaware law, the
General Assembly would have to authorize the city to levy such
taxes.
The
report also notes that Delaware, unlike "most states," does not
have a permanent revenue-sharing system to assist local
governments. The state does provide assistance in several
specific programs. The report lists Delaware last among the 50
states in terms of local revenue as a percentage of total tax
revenue collected in the state, but that ranking does not take
into account the fact Delaware provides many services, including
road maintenance and public schools, which are municipal
responsibilities elsewhere.
Minner
said the task force, which is expected to deliberate in public,
is not restricted to the council proposals. Baker said the
council started out with about 50 possible ideas to consider,
but did not say what any of the others were. The governor said
that ideas from any source will be welcome.
Baker,
however, rejected as "inconsistent with the problem [and] not
fiscally sound" a proposal attributed to Republican sources that
the city could make $1 million worth of budget cuts and use that
money to hire additional police officers. The idea will not
"stand up under the weight of reality," he said.
"We've
cut the budget for three straight years; we've laid off people
(city workers) for three years," he said. "Even if we could
remove $1 million from the [current] budget, where do we go
from there?"
It was
announced that Fred Sears, head of the Delaware Community
Foundation and chairman of the financial advisory council, and
Scott Green, of M.B.N.A. Bank, will chair the task force. City
Council president Ted Blunt said he will appoint Councilman
Michael Hare to be City Council's representative. The other 20
members, who will come from state, city and New Castle
County governments and the private sector are to be announced
soon.
Blunt
noted that Minner responded by agreeing to create the task
force immediately upon being presented with the report on Mar.
28 and hailed that indication of support despite the fact that
she is confronted with a serious financial situation on the
state level.
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