Property taxes in Sussex County would stay the same for the 18th straight year with a proposed $142 million 2008-fiscal-year budget introduced Tuesday, despite decreasing revenues as a result of the sluggish real estate market.
The proposed budget only grew 1.4 percent from last year but its general fund relies more heavily on questionable building-related revenues, with roughly $18 million budgeted there to help cover rising costs — a $3 million increase over last year.
The proposed budget takes into account 10 percent increases in the public safety budget and the county’s group hospital rate, among other increases. County Administrator Dave Baker, who led the effort to draft the budget, said he was not worried about relying heavily on the transfer tax.
“There still is some room there, so I’m not real nervous about that. But it’s certainly something that we will watch closely,” Baker said. “It’s a concern — but, again, we are at $27 or $28 million in collections this year.”
Councilman George Cole (R-4th) on Tuesday questioned the county’s reliance on the transfer tax.
“I don’t know how we can keep relying on market-driven revenue sources,” Cole said. “In the future, there may be a need for a (property tax increase).”
Susan Webb, who took the county’s finance director spot when Baker replaced former county administrator Bob Stickels late last year, said a property tax was discussed this year because of decreasing revenues but was ultimately voted against.
Sussex County officials proposed slight sewer and water charge increases with the budget but did not follow the lead of New Castle County and some local towns by pursuing a tax increase. Baker and his team — which included former Ocean View Town Manager Kathy Roth — budgeted $22 million in transfer tax revenues in the proposed 2008 plan, a more than 20 percent decrease from this year’s estimated $27.2 million, a 20 percent decrease from 2006.
Local and state governments share a 3 percent transfer tax after the sale of property. County officials plan to cover the less-than-normal-lately tax revenue by slashing capital contributions to the new county administrative buildings and other expected projects.
Last year, the county budgeted roughly $19 million in its non-sewer-or-water-related capital improvement budget. That number has dropped to $10.4 million in the 2008 proposal. But Dover legislation could still dismantle county finances.
Bruce Ennis, a Smyrna representative, last month introduced House Bill 111 — a bill that he recently said was meant to deter irresponsible growth statewide by pulling the local share of the transfer tax in rural developments and using that money to help cover a transportation shortfall, a move that could cost the county millions.
According to Ennis, a substitution bill will be introduced late this week or next to clear up language in HB 111 and apply it only to developments approved after July 1 of this year.
“I’m definitely interested in smart growth,” Ennis said Tuesday. “In Kent and Sussex counties in particular, the public is very concerned about controlled growth.”
It is unclear what kind of effect the new bill could have on county coffers. In the front of Baker’s 88-page budget letter, he listed programs that could be cut to cover shortfalls. They included county sewer grants; library expansion contributions — including $75,000 at South Coastal Library in Bethany Beach; $1.6 million in the program to cover portions of state police officers’ salaries; $525,000 in local law-enforcement grants; town grants; CHEER transportation grants; and open space purchases.
Baker said he and other county officials are monitoring Dover’s actions closely and hoping nothing passes through the legislature that would further compromise already-struggling county revenues.
“If that change came about, that would have a major impact on our revenues and we would have to look at cuts,” Baker said.
All housing industry-related revenues have fallen from more than $51 million in 2006 to roughly $33 million in the 2008 plan a result of the troubled real estate market. The number of single-family homes, townhomes and condos sold dropped from 4,678 countywide in 2004 — and 4,598 in 2005 — to 3,556 last year.
Sales numbers through May 22 of this year show that Sussex County’s slowdown is currently at its lowest point. Only 1,104 homes, townhomes or condos had been sold in 2007 as of Tuesday. That number was 1,624 in 2005 and 1,307 through May 22 of last year.
With tight departmental budgets and a questioned reliance on transfer taxes, though, county officials have covered increases, such as a 10 percent one in a public safety department that has been stressed by ever-increasing calls, Baker said. In the decade from 1996 to 2006, Sussex County EMS calls for service grew from 9,600 to 16,268.
The growing public safety budget includes two new hires for the EMS department and a yet-to-be-signed new agreement with the Delaware State Police to add four more officers to the county. The county covers portions of 32 state police salaries through state police/county agreements. The agreement, which would cost roughly $435,000, would take that number to 36 officers.