Newark officials are proposing a 3.5 percent property tax hike as well as utility rate increases in the 2025 budget.
If all the increases are approved by city council in November, average residents would pay the city a total of $255 more each year – equivalent to a 7.7 percent increase to their overall cost.
“This adjustment would allow us to keep up with inflation and maintain our current level of services,” Finance Director David Del Grande told city council on Monday.
The tax hike, which would take effect July 1, would generate an additional $168,438 in 2025 and $336,875 in future years.
In addition to the tax hike, City Manager Tom Coleman's budget proposal calls for a 10.5 percent electric rate increase, a 9.5 percent sewer rate increase, a 3 percent water rate increase and a 3 percent stormwater fee increase.
One of the biggest challenges in the budget is rising personnel costs due to new union contracts and employee retention efforts. Police salaries continue to be an issue as the city faces strong competition from neighboring police agencies, and Newark often loses officers to higher-paying jobs. A recently approved contract gave police officers an 11 percent raise and increased the starting salary for a rookie officer to $70,000.
The proposed budget also adds three new positions in the public works department at a cost of $218,000. Officials said the new employees are necessary to keep up with the workload and handle increased regulatory requirements. The budget also includes a new part-time position in the police department to process speed camera violations, but that will be paid for through the fines collected.
The electric rate increase is due to the rising cost of wholesale power, as well as the start of a multi-year project to build a new $37 million electric substation that will increase reliability and service the growing STAR Campus.
The water rate increase will help pay for upgrades to the water treatment plant necessary to meet new federal water quality standards. The sewer rate increase is to pass on higher fees charged to the city by New Castle County.
Though the proposed increases are no doubt unwelcome news to Newarkers, they are much less than would have been necessary without additional state help.
“We sat up here months and months ago and talked about potential of a 30 percent tax increase,” Mayor Jerry Clifton noted.
City council spent the early part of this year debating ways to find new revenue streams, settling on a controversial attempt to levy a per-student tax on the University of Delaware. The state legislature declined to authorize that but instead gave the city $2 million this year.
That was a one-time payment, but officials are hopeful the legislature agrees to make it a permanent recurring payment starting next year. That $2 million is included in the budget proposal, and if the city does not receive the money again, it would balance the budget by reducing the amount of money allotted for street repaving.
Some council members skeptical of tax hike
City council will vote on the $123 million budget on Nov. 4. Before the vote, there will be a public hearing, and residents will have a chance to provide their feedback.
On Monday, most council members seemed to understand the reasoning behind the utility rate increases, but several were more skeptical of the tax hike.
“I don't think that I would support even considering a tax increase for this fiscal year,” Councilman John Suchanec said. “We are turning every knob possible to take money out of the wallet of our constituents, and I don't think that the property tax is called for. We've done it a number of years, and I think it's time to stop turning that knob, or at least take a rest from turning that knob.”
Councilman Travis McDermott concurred.
“If there's the opportunity for us to not hit them with this 3.5 percent tax increase, I would like to do that,” McDermott said. “And I think that we're in a position to make that happen with a few minor cuts here and there.”
He and others questioned the need to add three new public works employees, arguing that at least one could be deferred to a future year.
“We always have to be careful about increasing personnel costs, which is highest cost the city has,” McDermott said.
Other revenue streams proposed
Suchanec, with support of several of his colleagues, said that as a new revenue stream, the city should consider charging for bulk trash pickups, the extra collection that residents can schedule for large items like couches and appliances. Newark currently offers the service for free.
“It's something that is not a benefit to every resident, because not every resident calls for a special pickup,” Suchanec said. “It is what I consider to be a bonus service that should have a fee associated with it.”
Councilwoman Corinth Ford advocated for eliminating the city's fall leaf collection, though that idea did not garner support from other council members.
Meanwhile, council supported continuing to push for a per-student tax on UD and to continue investigating the feasibility of an events tax. The idea, which would add a surcharge on tickets sold for sporting events, concerts, etc., has been discussed before but never seriously pursued.
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