Property owners these days are bearing a proportionately much greater share of the cost of county government services than they have in the past, acting chief financial officer Ed Milowicki told a County Council budget hearing.

He said that, with the sharp decline in proceeds from the realty transfer tax, nearly 69% of county revenue this fiscal year and next will come from the annual levy on land and buildings. That compares to about half in fiscal 2004 and 2005 during the boom in the real estate market. Particularly significant, he added at the session on Mar. 29, is the fact that, during previous county administrations, the transfer tax was directed primarily toward paying the bill for police protection and other public safety functions. That spending category will account for 60¢ of every tax dollar that county government expects to spend in the year which begins in July. Service charges of various kinds have replaced the transfer tax as the provider of the second-largest share of county income.

Milowicki testified that total property assessments in unincorporated areas of the county have increased about 7% since 2004 while those in Middletown have more than doubled and Townsend's are up fourfold. Countywide, assessed value of real property stands just under $18 billion, based on 1982 market value. He disclosed that the county plans to take advantage of its federal stimulus legislation authorization and sell between $50 million and $75 million worth of bonds next autumn. That, he said, will 'save' some $3 million in the cost of servicing long-term capital debt. About 90% of the bond proceeds will go into sanitary sewer projects with the rest going to finance a new library in Claymont and expansion of the Bear library. County debt, he said, is well under the 3% statutory ceiling. (CLICK HERE to read previous Delaforum article.)

As previously reported, the county is not planning an election-year increase in the 70.18¢ property tax rate for next year, but there will be a 4% increase in sewer rates. Some $7 million in accumulated reserves will go to finance an anticipated $7 million budget shortfall.

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EDUCATION GRANT: Delaware is one of two states designated to receive federal 'Race to the Top' grants to help implement plans to reform their public education systems. Delaware will receive approximately $100 million over the next four years. State education secretary Lillian Lowery said the money will aid low-performing schools. But Department of Education spokespersons did not respond to a Delaforum request for information about how the money will be allocated. Lowery said plans include 'data coaches' to assist teachers, 'development coaches' to work with principals, and fellowships and retention bonuses for "highly effective teachers in certain high-needs schools." Tennessee was the other state to receive grants, the U.S. education secretary Arne Duncan announced on Mar. 29.

Brandywine superintendent Mark Holodick said he understands that about half of the federal money will be distributed among all the Delaware districts, based upon the formula for 'Title One' funds. The rest, he said, will likely go to aid "failing schools." Results of the recently conducted student assessment tests will be used to determine which schools fall into that category. However, he added, it is doubtful that some districts will seek that support because of reluctance to acknowledge they have "failing schools." The Brandywine school board in January voted to seek grant money to "help support some initiatives we're not able to do ourselves." Holodick said how the money will be administered in Delaware will be better known after test scores are made public in June.   (CLICK HERE to read previous Delaforum article.)

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Enrollment in non-public schools dropped by 4.6% this academic year, compared to last, while the number of children being home-schooled increased significantly.

Data made public by the state Department of Education on Mar. 24 showed the year-to-year loss of pupils in tuition-charging schools to be greater than in any of the past 20 years. Observers had anticipated the decline, having attributed it primarily to the economic recession. That was confirmed by the fact that the steepest declines were in schools known to serve populations lower on the economic ladder. St. Paul Parochial, which draws mostly from the Latino community, for instance, lost a fourth of its students. On the other hand, Tower Hill and St. Andrew, which attract affluent families, posted increases. Catholic diocesan and private schools matched the state average, but schools with other religious affiliations, mostly Christian, experienced a 7.5% decline.

While the report lumps recognized home-schools with independent private schools, it reported a 5.5% increase in the number of schools in that category with no recognizable conventional schools added to the mix. Towle Institute, which is connected to the home-school movement, posted a 22.6% gain in enrollment. The proportion of students in non-public schools fell this year to 14.8% from 15.5% statewide and from 19.7% to 18.8% in New Castle County. Charter school enrollment is 5.1% higher this year with charter schools in New Castle County showing a 7.5% gain. Charter schools are independently governed public schools. A DelDOE spokesman declined to say why it took so long to make public the information, which is derived from headcounts taken last September.

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FINANCING AVAILABLE: New Castle County government will use recovery-zone bond financing authorized by the federal economic stimulus law to raise its share of the cost of building a new library in Claymont, Councilman John Cartier told the community Design Review Advisory Committee. He said Council in May will authorize selling $4.8 million worth of bonds after completing a formal agreement with Commonwealth Group, which has offered to donate a site in the Darley Green development for the library. State government will put up $1.5 million and $1 million will have to be raised by the community, he said at the committee meeting on Mar. 24. The new facility, to replace the one in the Claymont Community Center, will meet national size standards, he added.

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RESTRAINT URGED: Two school board members urged the Brandywine district administration to move cautiously when deciding how to shuffle authorized capital funds 'saved' by not having to renovate the Hanby building and coming up with a good deal to acquire a site for its bus depot. After support services director Barbara Meredith referred vaguely to using some money previously earmarked for the depot project to pay for unspecified additional work at the recently opened Lancashire building, Joseph Brumskill called for a full accounting of planned reallocations. Ralph Ackerman followed up by saying any money not spent during the final phase of the district's renovation program "should be returned to the taxpayers" instead of being redirected to other purposes.

The exchange came after the board at its meeting on Mar. 22 unanimously approved purchase of an additional property at the bus depot site in northeast Wilmington for $990,000. It previously authorized buying the formerly leased bus yard and adjacent parcels for $2 million. That, Meredith explained, means the district will have to finance about half of what voters authorized at its 2005 capital referendum. Last month, the board approved spending $1.3 million, transferred from the Hanby authorization, to build additional classrooms at overcrowded Lombardy Elementary. Superintendent Mark Holodick said any futures reallocations "will be done in the open light of day" and only after a full review by the district's renovations oversight committee. (CLICK HERE to read previous Delaforum article.)

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WHY ARE WE HERE? Jea Street, County Council's most outspoken member, questioned spending eight weeks probing details of the proposed fiscal 2011 budget when there is no likelihood Council will deviate from past practice and not accept the spending plan as submitted. "We don't challenge anything; we don't change anything. Why not just approve the budget ... and go home?" he said on Mar. 22 at the first session. Street questioned spending $112,000 to contract with a professional lobbyist when, he said, any needed lobbying could be done by the executive office staff. Finance committee chairman George Smiley said any Council member can offer budget amendments, but Street argued that at least six other members would have to support an amendment for it to be enacted.

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County Executive Christopher Coons proposed a $164.85 million operating budget for the coming fiscal year and, as expected, called for financing it without increasing the 70.18¢-per-$100 property-tax rate in unincorporated areas.

If County Council follow the usual course and enacts the budget without any substantive changes, authorized spending in the year which begins July 1 would be 4.3% higher than the most recent estimate of what county government expects to spend this year. The cash reserve would be used to finance a $7 million shortfall in fiscal 2011. That would be up sharply from the anticipated $2.8 million to be taken from the reserve this year. The requested sanitary sewer fund budget for next year is $65.7 million, a 5.4% increase from anticipated spending this year. Coons asked for a 4% increase in sewer fees, which he said was necessary "to pay for increased wastewater treatment costs to the city of Wilmington and for improvements to our aging sewer system."

There was only one significant surprise in Coons's budget presentation before a special session of County Council on Mar. 16. He disclosed that three municipal workers unions, representing 725 workers -- about half the county workforce -- have rejected a proposal to continue the pay cuts they agreed to last year in return for a no-layoffs agreement. As a result, he said, "workers in those three unions will be facing layoffs." Despite "the most demanding and uncertain economy in 70 years," Coons said county government "did what many other local governments could not or would not do." He offered a department-by-department list of accomplishments ranging from a 12.2% reduction in reported crime to effective use of volunteers to maintain parks, libraries and senior services. (CLICK HERE to read previous Delaforum article.)

County Council will hold public hearings on components of the budget on Monday afternoons through early May and is scheduled to vote on it during its regularly scheduled session on May 25.

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STATE REVENUE FORECAST: For the first time in nearly two years, the state's official revenue forecasters found a glimmer of economic sunshine, but no way near enough to signal an end to its budget problems. The revenue committee of the Delaware Economic & Financial Advisory Council at a meeting on Mar. 15 increased its income projection for the current fiscal year by $57.5 million over what had been estimated in December and by $52.5 million for the year which begins on July 1. The council will hold three monthly meetings at which it will further massage the data  before issuing the final report upon which the General Assembly is required by law to base the state's fiscal 2011 operating budget.

Driving the higher 2010 estimate was a $70 million improvement in the escheat account. While crediting stepped-up enforcement, David Gregor, the finance department's director of research and analysis, cautioned that abandoned property is a highly volatile revenue stream. Also forecast was $15 million more from the corporate income tax. Personal income tax receipts -- the largest category of state revenue -- continue to be weak, leading to a downward revision of $17.3 million in that category. The loss of some 4 million jobs in calendar 2009 was cited as the reason behind an expected 1.6% decline in wage and salary income in Delaware this fiscal year with a further 1.7% drop expected next year. (CLICK HERE to read previous Delaforum article.)

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Delaware traditionally ranks high among the states in per-capita income, but evidently doesn't have anywhere near the number of millionaires some allegedly knowledgeable sources think.

Lobbying for repeal of the state's estate tax, the bar association, relying on "recent statistics discussed in the News Journal," referred to "only 16,000." The lawyers' organization said that if a fourth of them moved to places like Florida, which doesn't tax estates, that would result in a loss of $100 million a year in state income tax. "The state would inevitably lose revenue from various other taxes and fees," it said in a position statement. Moreover, it argued that the Division of Revenue estimate that the Delaware estate tax will yield $22 million "was grossly inflated." Based on the number of rich people likely to die between now and 2013, when the law expires, a more reasonable estimate would be $9.6 million over the entire four-year period, the statement said.

David Gregor, of the state finance department, who compiles data for the Delaware Economic & Financial Advisory Council, took umbrage at the position statement's implication that department data is faulty. He did some research and came up with the conclusion that the lawyers' millionaire nose count was exaggerated about ten-fold. There were 1,608 tax returns reporting income of $1 million or more filed last year and that included joint returns from husbands and wives, he told the council's revenue committee. It is estimating estate tax revenue of $2.5 million this fiscal year and next. Committee chairman Ken Lewis objected to presentation of the position statement the its meeting on Mar. 15 on the grounds that the committee has no desire "to become a funnel for advocacy groups."

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An apparent majority of County Council members wants to restore their ability to donate to 'worthy causes' during the coming fiscal year. Council axed the charitable grants program from its budget for the current fiscal year. 

Coucilwoman Lisa Diller told a finance committee meeting on Mar. 9 that she would like to see money for such grants included in the fiscal 2011 budget. She said nonprofit community organizations are being called upon in the current economic climate to aid more people, adding that she thought Council should assist even if its contributions would be relatively small. Referring to two charitable 'food pantries' in his district, John Cartier said, "You want to be able to help them at a time when their needs have exploded." Jea Street agreed saying that "we need to do what we need to do in terms of our responsibility to our fellow people." During the fiscal year ended last June 30, Council gave grants totaling $172,849, or 88.6% of its grants budget. State government also provides such grants.

Council president Paul Clark noted that county government continues to administer community programs which serve a variety of social needs while some Council grants went for other purposes. Committee chairman George Smiley said he would be "willing to listen differently to grant requests when county employees get back [the] 5% of their salaries" which were cut to help meet the budget shortfall. Although there is not likely to be any public disclosure until County Executive Chris Coons submits his budget request on Mar. 16, Smiley's comments indicated that he thinks it likely the pay reductions will be continued. He suggested that Council members might agree to donate part of their office allowances to charities, but added that he is "not interested in expanding Council's budget." (CLICK HERE to read previous Delaforum article.)

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MASTER PLAN: Preliminary work on the quintenial update of New Castle County's comprehensive plan will begin with the turn of the fiscal year in July. County Council on Mar. 9 authorized the Department of Land Use to use $150,000 left unspent in its current salary budget to hire a consultant to facilitate and interpret the results of public involvement in the plan-drafting process. General manager David Culver said that, as a result of personnel reductions, the department is too shorthanded to do that work in-house as it has done in the past. Council president Paul Clark noted that "in a county of 550,000 people, there will be 200 or [fewer] who participate" in the public 'input' portion of the process. Under state law, the plan must be approved by Council at the start of 2012.

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Arguing that it would seriously endanger some 11,000 children, school officials in the Catholic diocese are mounting a grass-roots campaign to turn back the Markel administration's bid to eliminate the state subsidy for school nurses.

Christine Zimmerman, the nurse at Christ the Teacher school, said that without a licensed professional available full-time, prescription medicines could not be given to students who require them nor would effective help be available to deal with medical emergencies, up to and including those which could be life-threatening. "These subsidies are critical," Schools superintendent Catherine Weaver said. "If the funding goes away, the nurses go away." Joseph Fitzgerald, the diocese's registered lobbyist in Dover, said that, as a result of efforts on behalf of all non-public schools, "we are close to getting the votes on the [General Assembly's] Joint Finance Committee to put the nursing money back."

State Representative Gerald Brady told a meeting of the Delaware Catholic Advocacy Network on Mar. 8 that enacted legislation to permit table games at the racetrack casinos and a pending measure to allow additional gambling venues in New Castle and Sussex Counties will partly relieve the budget crisis used to justify eliminating the nursing subsidy, partial reimbursement of the cost of transporting students to non-public schools and driver education. "The good news is we're getting back to where we were" before the recession, he said. He and several attenders at the meeting referred to indirect state support as a right of tax-paying citizens not in violation of constitutional separation of church and state. "They (support measures) are not a burden on public education," Brady said.

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There will be no school board election in the Brandywine district this year. Both board president Debra Heffernan and Olivia Johnson-Harris filed to stand for another term and no one came forward to challenge either of them.

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STILL IN THE RUNNING: Delaware was one of 15 states plus the District of Columbia, picked by the U.S. Department of Education to remain in competition for 'Race to the Top' grants to improve public schools. In a press statement on Mar. 4, the state Department of Education claimed that being designated a finalist was recognition of its "efforts to improve student achievement and create stronger public schools." Neither state nor federal officials offered understandable specifics about how the selection process worked. The finalists will send representatives to Washington to present their cases and winners of grants in the $4.35 billion program will be announced in April. State officials have been vague on how the money, if received, will be allocated among Delaware's public school districts. (CLICK HERE to read previous Delaforum article.)

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CHIEF NAMED: The word 'acting' has been dropped from Michael McGowan's title. He will continue to serve as chief of the New Castle County police force, the role he assumed when Rick Gregory, the former chief, was appointed last September to be chief administrative officer in the Coons administration. McGowan, who joined the force in 1989, had been Gregory's executive officer for three years. A press statement issued by Coons's office on Mar. 4 said McGowan "was chosen from a field of [four] strong internal applicants" on the basis of his "education, experience and demonstrated ability." His salary in his new position is yet to be determined, according to spokesperson Angie Basiouny. He made $104,093 as acting chief. Requisite County Council approval is considered certain. (CLICK HERE to read previous Delaforum article.)

Last updated on March 30, 2010

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