Sussex County is on pace to receive about 20 percent less real estate transfer tax revenues in the 2007 fiscal year than it did in the 2006 fiscal year, in another reflection of a slumping real estate market in the area.
The $35.3 million received from the transfer tax — which is collected after the sale or resale of a home — last year accounted for 46 percent of the county’s revenue and almost solely generated last year’s $10.9 million surplus. Revenue generated from the tax more than tripled that from property taxes, which have not been raised in 16 years.
Although the county had only received $14.6 million as of Dec. 31, however, officials do not expect the slumping market to cause a tax increase or a decrease in operational spending. They still expect to meet conservative 2007 transfer tax revenue projections of $28.7 million.
“There are projects in the capital improvement program that could be deferred,” in a dire situation, County Administrator Dave Baker said. “We would look at those first before cutting basic services (such as paramedics).”
Capital program cuts could mean fewer improvements at the Sussex County Airport and a less aggressive plan for a future replacement administrative building. County officials budgeted more than $17 million in expected transfer tax revenue into the capital programs this year.
The immediate impact of lower transfer tax revenues, though, will merely be the loss of surpluses to which county officials have become accustomed, some said Tuesday.
Transfer taxes have been almost wholly responsible for roughly $11 million budget surpluses in the last three years and for the growth of the county’s “rainy day” fund, which held $13.2 million at the end of last fiscal year. County Finance Director Susan Webb said the “rainy day” fund could help sustain projects and reiterated that capital projects would be first to go if officials were forced to make spending cuts, something she does not anticipate.
Webb predicted that transfer tax revenues would “level off” later this year.
“We have anticipated this in the budget,” Webb said. “We knew this peak could not last forever.” The “peak” of transfer tax revenues came in 2005 when the county brought in more than $36 million, a year after receiving $27.4 million in 2004. That 2004 number is just less than what the county is on pace to receive this year, a number that does not worry the county’s top financial official.
Others, including Councilman George Cole (R-4th), were not as optimistic.
“We are growing a large county government (which translates into) more future pensions,” he said. “Also, with a growing population, we will need more paramedics. You look at our budget: $35 million comes from transfer taxes, $10 million from property taxes. I think that would concern some people,” Cole said. “Something has to give.”
Transfer tax numbers, however, were the only dark cloud in Tuesday’s 2006-fiscal-yaer financial review. Jefferson, Urian, Doane and Sterner Certified Public Accountants, which recently completed their annual audit of the county’s financial situation, praised county staff and council for another prosperous and fiscally responsible year. The 2006 fiscal year saw a budget surplus of more than $10 million and marked the 10th consecutive year the county has ended up on the positive side of that line.
Sussex County officials expect to receive the Excellence in Financial Reporting Award, the most prestigious for government finance reporting, for the fifth straight year, according to a Sussex County press release.
“Once again, we enter the year in the black and this is proof-positive the county is being run efficiently,” said County Council President Dale Dukes (D-1st). “I credit our staff with earning Sussex County another stellar report. They do an excellent job in managing the funds of the county and making sure all departments are on budget.”