News

October 6, 2004

County Executive Tom Gordon said it should not be a foregone conclusion that the accumulated budget surplus will be essentially depleted or that it is inevitable that the property tax rate will have to be increased after about four years.

On the contrary, he told Delaforum, his successor will take office with a financial cushion "unparalleled anywhere in the country" and should be able to extend Gordon's pledge of no tax increase, made when he took office nearly eight years ago, well into the foreseeable future.

"It will be [many] times greater than what was left for me to work with when I came into office. ... We've been able to make a complete turnaround in eight years," he said.

"If I was going to be here, I would increase it (the surplus)," he added. Being only partly facetious, he said the amount could be as much as doubled from its present level during the coming four years.

Asked how he would accomplish that, Gordon replied, "Keep on doing what we have been doing."

Gordon also told Delaforum that, before he leaves office in January, he intends to advance at least

way to broaden the tax base and support his own pledge not to raise taxes if he is elected.

The current tax rate in unincorporated areas is 45½¢ for each $100 of assessed property value.

County finance director Ron Morris told County Council's finance committee on Sept. 28 that combined surpluses fell from $242 million to about $230.5 million during the fiscal year ended June 30, 2004. At the present rate of spending, he said, county government will have about $17 million in reserves going into fiscal 2010, but the portion of the reserves earmarked to preserve the property tax rate will be gone. The 20% statutory reserves for both the general fund and the sewer fund and the so-called 'rainy day fund' will remain, he said.

In order to preserve the tax rate, the surplus has to be used to finance what are expected to be annual operating budgets, which are expected to run deficits beginning with this year's.

Gordon said that the budget surplus "isn't a political issue." He called it the result of prudent fiscal management.

"We're not wasting it. The money is going to libraries, parks and police," he said.

The fact that the county has a large surplus, has a relatively low tax rate and hasn't had to raise taxes during his two terms in office were the major contributing factors to its most recent bond issues having been given the highest rating by all three prestigious Wall Street rating firms, he said.

Asked if the presentation by Morris, a key member of Gordon's administration, to the Council committee did not conflict with his views, Gordon would only say that Morris was speaking as a professional finance manager, a role in which "he has to be conservative."

Both Gordon and Morris have said they expect to garner another triple-A rating for an $80 million bond issue which Council on Oct. 5 authorized to be taken to market, probably before the end-of-year rush in the tax exempt municipals market. Earlier this year, the county went to that market to borrow $100 million. The general obligations bonds are paid off serially over a 20-year period.

The coming issue drew some initial criticism because it includes money to pay for the county's $15 million share of the buy-out of property owners in Glenville whose houses were destroyed by flooding during the September, 2003, storms; $10 million for a nature education center on the Christina River waterfront in Wilmington; and $1 million for Iron Hill Museum.

The coming bond issue and subsequent ones will have a negligible impact on the tax rate. Payment of principle and interest on bonds amounts to somewhere in the neighborhood of 10% to 12% of the general fund budget, which this fiscal year anticipates spending $207.5 million.

Gordon spoke to Delaforum at a ceremonial check-passing event marking payment of the first $7.5 million of a $15 million three-year grant to Wilmington city government for use in financing public safety, including a recently approved pay increase for city police officers. Although the traditional oversized check was presented, the actual payment was made, in keeping with current banking practices, as a wire transfer.

Gordon told an assemblage of city and county officials that the event was particularly significant as it marked the culmination of a "trend away from fighting one another over who was going to [provide] what services to a cooperative relationship."

"The city is part of the county. For some reason, that's a hard fact to get across to some of the citizens of the county," he said.

Wilmington Mayor James Baker said that both New Castle County and the state have important stakes in the well-being of the city. "Without strengthening the city of Wilmington, we're only hurting ourselves," he said.

"Tom [Gordon] and Sherry [Freebery, the county government's chief administrative officer] have been great to work with," Baker said. He said he hopes that the next county administration "will work for the common good [and not] look out for [its] own interests."

Councilman Robert Woods, who chairs the public safety committee, said County Council "stands committed to assisting the state to take care of your (Wilmington's) long-term interests."

Baker told Delaforum that nothing has yet been done to follow through on Governor Ruth Ann Minner's stated intention to reconvene the taskforce set up two years ago to recommend long-term solutions to the city's fiscal problems. The mayor said he doesn't "look for much to happen" before the November elections.

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