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11/13/2008
Coons announces mid-year budget cuts, says more are coming

Coons announces mid-year budget cuts, says more are coming
FY2009 revenue projections down $14 million

By Jesse Chadderdon
Community News
Posted Nov 13, 2008 @ 04:08 PM
New Castle, Del. —

New Castle County Executive Chris Coons announced Thursday the government is taking several steps to cut costs in the face of dire financial projections, including a hiring freeze, cuts to overtime and a freeze on the routine purchase of new police cars and other county vehicles.

Revenue estimates are down more than $14 million since fiscal year 2009 began five months ago, and the county is projecting an operating deficit of $30 million this year – money that will have to come from shrinking reserves.

The county is being battered by the national recession, with the slowing real estate market slashing real estate transfer revenues – the county’s second largest source of income. If nothing is done, the county’s reserves will dry up by the end of the next fiscal year, Coons said.

“This is not unique to New Castle County or as a result of any actions by us,” he said, "but the rate at which we have been losing revenue is picking up speed.”

The cuts announced Thursday are expected to save the county $5 million, but officials warned they were only the beginning. More significant cutbacks – like reducing the hours county libraries are open – could be announced before the New Year.

And Coons left little doubt his proposed 2010 budget would include a property tax increase.

“The county budget next year will have to include reduced spending in all departments and recommendations to increase revenues significantly,” he said. “If we are unable to increase revenues to compensate for some of our lost revenues and pay for the cost of our government, we will have no choice but to take more significant actions to bring our expenses in line with our revenues.”

He said all the revenue raised by the county through a 5 percent increase in 2006 and a 17.5 percent increase in 2007 has been lost in the economic downturn.

Coons said everything was on the table, but that layoffs would be a last resort. Councilman George Smiley (D-New Castle), who co-chairs the council’s Finance Committee, said that asking some employees to cut their hours back could be necessary down the line, but that the county would do everything in its power to avoid layoffs.

This round of cuts includes a hiring freeze for all but essential positions and front-line public safety openings. Coons said his administration would have to sign-off on any new hire by any county departments. Additionally, overtime will be eliminated and employees will be limited in the travel and training they are allowed to attend. Also, prior approval will be required from the administration for any contractual services.

Some small-scale capital projects will be eliminated, Coons said, and the purchase of new county equipment and vehicles will be delayed.

Beginning next year, Coons said he will join members of the county council in their districts for public meetings about the county’s financial future, something he also did after being elected to his first term in 2005. He said he wants to have a frank dialogue with residents about what services they value and the price they are willing to pay for them.

The average New Castle County taxpayer currently pays $400 per year in property taxes. If the operating deficit were to be made up strictly by way of a tax increase, it would take an additional $200 per year.

However, Coons said explicitly that magnitude of an increase is not under consideration, but said it illustrates the seriousness of the problem the county is facing. The rainy day fund, often seen as an untouchable pool of $31 million, could be gone by 2012 if the economy doesn’t recover and the county doesn’t take steps to address its finances.

“It is indeed a rainy day in county government,” he said.

Even Councilman William Tansey (R-Greenville), who co-chairs the Finance Committee with Smiley and has never supported a tax increase, acknowledged one could be necessary this time around.

“They could be factored in but we have to see how we’re going to deal with other things first and then if I’m convinced we’ve really cut to the core then there is an option for a tax increase,” he said.

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