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In the
first of what are planned to be quarterly reports on county
finances presented to County Council's finance committee, Strine
said projected growth in revenue will not keep pace with
increases in spending, even with the Coons administration's
tightened fiscal policy. As a result, accumulated budget
reserves intended to preserve the present tax rate would be
wiped out during the fiscal year beginning July 1, 2008.
Given
that the public is not willing to have services such as police
protection, emergency medical response, parks and libraries
curtailed, deficit spending is inevitable, he said.
"The
have to keep expectations of what they get in line with what
they pay," he said.
While
it has become a foregone conclusion that an increase in the
property tax rate is coming -- likely during the present terms
of County Executive Christopher Coons and seven of council's 13
members -- Strine's presentation at the committee meeting on May
10 was significant because it was the first indication of the
order of magnitude of the increase made public by a ranking
county official.
A 30%
increase would be comparable to the 28% increase in sewer fee
rates that Council is expected to enact for the coming fiscal
year.
"It's
very sobering [information], but it's imperative for us to
know," said Councilwoman Karen Venezky, who chairs the
committee.
Councilman Timothy Sheldon said that although the prospect of
higher taxes expressed as a percentage "seems big," it is not
when viewed in terms of additional dollars and in the context of
rate-payers having gone 15 years without an increase when it
would be imposed.
The
increase for a 'typical' residential property in the
unincorporated areas of the county assessed at $75,000 would be
about $95.
"Incremental smaller changes [would be] better than this larger
change," Councilman Robert Weiner said.
Councilman John Cartier called for Council to formally establish
spending priorities in line with residents' desire for services.
"We're going to need resources to come to the mark with those
things," he said.
"Starting as early as September, we (Council members) should sit
down with the administration [officials] and address long-term
planning as a cooperative project," Council president Paul Clark
said.
Venezky previously introduced into Council a resolution calling
on Council to "evaluate and assess the direction of the county,
what services are provided, to whom and at what cost." It would
"establish guidelines for managing the long-term fiscal health
of the county."
Since
its introduction on Apr. 12, the proposed resolution has
undergone significant revisions -- mostly to remove specific
targets such as 3.5% budget growth over the next five years and
a 5% reduction in the size of the workforce during fiscal 2006.
A fourth iteration of the resolution is officially tabled and
could have been brought to a vote at Council's plenary session
on May 10, but Venezky did not refer to it either at the
committee meeting or at the session.
Strine
softened his rate projection somewhat by emphasizing that it is
based on how things now stand. "There can be strategies to
change that," he said.
County
government, for instance, was able to accumulate reserves
because the state legislature granted it a larger share of the
reality transfer tax at a time when the real estate market was
booming. Although there is nothing presently foreseen in that
regard, further modification affecting that revenue stream or
the making available of an another source of revenue is always a
possibility, he said.
More
realistically, he added, administration policy could at least
lessen the magnitude of the increase. The operating and capital
budgets that Council is scheduled to enact on May 24 represent
the beginning of "a course change" in county fiscal policy, he
said.
According to the quarterly report which Strine presented to the
committee, the proposed fiscal 2006 operating budget's $153.9
million spending plan is 4.6% higher than $147.1 million in the
current budget when it is adjusted to include increases between
when the budget was enacted in May, 2004, and the end of
January, 2005. The 5% increase in personnel costs, the largest
single spending category, is the result of large increases
in the cost of health-care insurance and pension costs partly
offset by elimination of several vacant positions. It is
proposed to increase other than personnel spending by half of
1%.
Even
so, spending in the coming fiscal year will exceed projected
revenue by about $10 million.
Strine's projections do not involve dipping into the county's
'rainy day' fund, which is intended to deal with unanticipated
emergencies. It is set by law at 20% of the budget. The size of
that reserve is being challenged by a taxpayers' lawsuit pending
in Court of Chancery.
Strine
said that the 20% set-aside is appropriate in view of the
limited number of revenue sources that county government has.
State government's 5% emergency reserve -- which is the basis on
which the county's is being challenged -- is justified because
of its more diversified sources of revenue, he said.
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