Delaware City Council continued its discussion on Monday regarding the next steps for generating funds for capital improvements following the failure of the income tax increase on the March ballot.
The failed proposal would have increased the rate from 1.85% to 2.20% for a five-year period while keeping the credit for those working outside of Delaware at 50%. The increase was projected to generate an estimated $7.7 million annually for infrastructure improvements.
City Manager Tom Homan led off the discussion by noting that while the city has been forced to make significant cuts before as a result of the recession, the issue facing Delaware today isn’t similar.
“This is a different situation, and this is really cutting to spend,” Homan told the council. “We want to make the investment in our infrastructure, and the question is do you cut back in these operational issues to invest in the infrastructure? That’s, unfortunately, the predicament we’re in right now. If we don’t go back and seek approval from the voters, we either don’t invest in the infrastructure, which is continuing to kick the proverbial can down the road, or we have to cut operations. Cutting operations means any number of different things, and that’s really the hard discussion we had last week and have had at the staff level.”
Ahead of Monday’s meeting, Director of Management, Budget, and Procurement Alycia Ballone and Finance Director Rob Alger reconfigured the city budget to analyze the feasibility of creating a $3 million surplus in the General Fund. To do so, hypothetical cuts were made to various departments that are either fully or partially funded by the General Fund.
While Ballone didn’t include the departments that were hypothetically seeing cuts, the reconfigured budget included five positions being reduced from full-time to part-time positions and six full-time and four part-time positions being eliminated outright.
Other cuts and adjustments included eliminating the $75,000 transfer to the Economic Development Reserve, eliminating all seasonal and intern staff not part of the Parks and Recreation Department, eliminating all professional development and cultural initiatives, reducing professional services across all departments, and remaining staff taking on additional responsibilities without increased pay.
“Essentially, all the things that keep the people who do an excellent job here, working here, we’re eliminating,” Alger said of the hypothetical cuts.
Ballone noted that while some of the reductions may seem like “low-hanging fruit,” they would likely lead to an increased turnover rate. “I would also like to point out that quarter one of this year, without talking about reductions, was the second-highest quarter for turnover in the last five years, so we are already competing with our neighbors,” she said.
Ultimately, the budget team concluded that achieving the $3 million surplus to invest in infrastructure would not be possible without cutting entire departments, performing citywide reorganization, and instituting layoffs to critical services such as the police department. Therefore, their recommendation was to place the levy back on the ballot in November with the possibility of reducing or eliminating the income tax credit.
“I think this list shows there is very little fat to trim … If we’re talking about uniform allowances of $1,600, and we’re talking about millions of dollars that need to be found, I appreciate that every little bit counts,” Councilman Kevin Rider said of Ballone’s hypothetical budget cuts. “I appreciate the list in that you went in and said, ‘What can we cut?’ It is a response to the community that says, ‘Cut, don’t raise our taxes.’ But even as just a first-pass exercise, there’s just nothing there. Sure, every little bit counts, but this isn’t solving the problem.”
Vice Mayor Kent Shafer, who chairs the Finance Committee that met last week to discuss options, also noted the cuts don’t “move the needle” and said it is the committee’s suggestion that the levy be placed on the ballot again. Shafer also said the city needs to seriously consider removing the 50% tax credit if the levy again failed.
“We don’t have any other way to generate the revenue we need to continue to operate,” Shafer said. “It’s not that we want to do this, and I certainly understand why the public wants that 50%, and I’m sure would like to have it at 100%. But we have to make decisions based on the revenues we have, the expenses we have, and the critical needs we have.”
Ballone also presented a few proposal options featuring various income tax and credit rates to show the impact on people who live and work in Delaware and those who live in Delaware but work in Columbus. The options ranged from 2.15% to 2.40% tax rates with a credit staying at 50% or jumping to 75 or even 100%.
Speaking on the idea of increasing the tax credit to 100%, Councilwoman Linsey Griffith said, “I’m sorry but unless you can show me that over 60% (of taxpayers) live and work in Delaware, I don’t think it’s ethical to ask 20-30% of the residents to foot the bill for the entire city. You’re asking a quarter of the residents to pay for the entirety of running the city if you do a 100% tax credit.”
Griffith added, “I think we missed the mark on educating the public on what the cost of this (levy) would be and making them understand what they get for their dollar.”
The deadline to submit any ballot language for inclusion in the November election is Aug. 7, and Homan suggested the reading process for a resolution would need to begin by July to allow time for the customary three readings.
Reach Dillon Davis at 740-413-0904. Follow him on X @DillonDavis56.
