Q & A: NCCo’s top money man sheds light on budget process

Budgets are complicated. And for a public who doesn’t live with the numbers every day, things can get downright confusing. So when news broke last month that New Castle County had finished up the fiscal year with $7 million more in revenues than initially projected, people had questions. Taxpayers saw their property taxes go up 25 percent at the outset of FY 2010, while county employees saw their pay cut by 5 percent, with both moves aimed at shepherding the government through a downturn in the economy.

The Community News caught up with Acting Chief Financial Officer Ed Milowicki to discuss just how the new revenue came about, why it couldn’t be counted on at the time other cost saving measures were taken and why the government is still not out of the woods financially.

Q) How are county revenues – which come from various places – calculated?

A) We have an independent board – the New Castle County Financial Advisory Council – that meets regularly to go over our revenue numbers. For the…budgets that [the] County Executive [Chris Coons] approves, those revenues are certified by NCCFAC. They scrub the numbers, ask a lot of questions and take a vote on our estimates, and those are the estimates we use going forward…We’re not – we can’t – undercut or opine any numbers on purpose.

Q) How frequently do you revisit the different areas of revenue? At some point before the end of the last fiscal year (on June 30) you had to have some indication that you were going to finish $7 million to the good.

A) We update our checkbooks (available to the public at www.nccde.org) monthly. But there were some oddities that happened this year. With Real Estate Transfer Tax, where the biggest increase was ($2.9 million over certified estimate), we had the federal homebuyers program that got extended to April, so we saw a big increase in those kind of transactions…Nobody knew that was going to happen. And a lot of our big transactions (the sale of the Valero refinery, multiple Exxon gas stations) didn’t happen until June, so we couldn’t have known.

Q) What about other sources, like sheriff sales (which brought in $1.6 million in additional revenues)?

A) We work closely with all our external departments on their revenue sources and we were told back in January just how bad [sheriff sales] were that month and how we’d never see that many again. But [they spiked again in March and June] and when you see July, there’s even more. There’s no way I would have know that when I was putting the budget together. Unfortunately a lot of our revenues are tied to real estate transactions and that’s just so hard to gauge.

Q) How much good news is there really? There’s another side to a lot of these revenue sources. Home sales are up but housing prices are down. If sheriff sales are up, that can’t be good news for the long-term health of the tax base.

A) Sure, and you also end up with more vacant homes with saps county services on the other side. You end up with more code enforcement and police issues…And in a community that’s seeing quite a few homes go to sheriff sale, you can guarantee that the value of the homes around them are going down and that’s not good either.

Q) There were some indicators during the budget year that you were going to finish to the good, even though you didn’t know how much. Not that spending more is the answer, but couldn’t council have elected to do something with some of that money?

A) Yes, but keep in mind that with Real Estate Transfer Tax, the extra money we realize from that goes into a separate fund (to pay for capital projects or debt service). By code, we wouldn’t have been able to use that to give back to the employees or the taxpayers or the volunteer fire service or anything like that.