New revenues bolster county coffers

As the rest of the economy continues to sag – and in part because of it – New Castle County took in $7.1 million more than was budgeted in FY 2010.

More than $2 million in Real Estate Transfer Tax came in from five large-scale property transactions last year, while smaller house transactions also spiked, largely because of federal first-time homebuyer incentives.

The price of those homes fell however, and even more significantly, foreclosures reached an all-time high in New Castle County, with a record 940 homes being sold at sheriff sale last year. That’s bad news for sure, but actually is good for county coffers. The county budget $3.4 million in revenue from the Sheriff’s Office, but actually took in $5 million, a variance of $1.6 over what was expected.

“When I look at the sheriff sales and they go up from 40 to 120 in a single month, I don’t know what could more negatively impact the quality of life in the county,” said Councilman Jea Street (D-New Castle). “We need to talk about what we’re going to do as a county to address this because it’s a major problem.”

Also on the real estate front, the county realized an additional $700,000 over budget from major commercial building permits. In fact, just 11 permits accounted for more than $600,000.

The “found” money has prompted calls from some within the county workforce to have 5 percent salary rollbacks reinstated. Workers agreed to the rollbacks as part of County Executive Chris Coons’ plan for a “shared sacrifice” that involved budget cuts, a reduction in workforce, salary givebacks and a 25 percent property tax increase levied the year prior.

In the last two years, the county has left 184 positions vacant. This year, 96 vacancies were identified and only 31 were filled.

“This workforce has been doing a lot more with less manpower over the last few years and I do think they ought to give workers their money back if the county is $7 million to the good,” said Dan Tharby, president of AFSCME Local 459, which represents park and maintenance workers.

But Gregory said the administration had no plans to do that this year, though he said they had every intention to make employees whole in the future.

“My hope is we can work together and try to give them back something they sacrificed,” he said. “Our expectations are that somehow they’ll be made whole again.”

“The important thing to remember is that these are all one-time revenues,” Chief Administrative Officer Rick Gregory told the Community News. “These aren’t things we can count on happening all the time.”

And while the short-term news is good – the county will be able to bank $7 million it had planned to spend from it’s $48.9 million reserve account – the mile up view remains troubling, Gregory said.

A $76.9 million shortfall is projected over the next five fiscal years, with reserves scheduled to expire at the end of FY 2013. That must be addressed through tapping into new revenue streams and making further, more lasting changes to the employee compensation structure.

County Executive Chris Coons conceded long-term challenges remain, but said FY 2010 is confirmation that his administration’s budgeting philosophy has paid off.

“We’re finally seeing the consequences of implementing this kind of budget practice,” he said. “We won’t go back to bad practices of [previous administrations] where we’re spending one-time money on things that have recurring costs…And we’re going to continue looking at the size and cost of the county workforce, as well as identifying ways to diversify our revenues.”