The Committee of 100 | FYI Archives

Economic Development in New Castle County is as dependent upon sewer capacity as upon transportation. County Executive Tom Gordon and his Chief Administrative Officer Sherry Freebery told the Business Group again on March 5th that they were continuing with the plan, in place since adoption of the Unified Development Code in 1997, to build the Southern New Castle County sewer system -- unless County Council decides otherwise. Council may do just that.

Such a decision would reverse the County's commitment. Early in the Gordon Administration, the County Executive noted that so much of the land immediately South of the Canal was already developed, under construction, or had approved plans, that it made sense to acknowledge the reality of the pending development and provide sewer service, rather than risk the environmental problems which septic systems can pose as they age. The Unified Development Code (UDC) included new proscriptions against septic systems and the promise of sewer for the new development (along with hefty impact fees). The Administration and Council both made the commitment to build a spray irrigation system and budgeted the funds to enable the County to proceed down the path of planning the system, purchasing the land, and, ultimately, constructing the system. The County has completed the planning, obtained the permits, purchased the land, and secured the right-of-ways for the water farm. Construction is pending.

With strict new mandates in the UDC, and with the clear understanding that the Southern New Castle County (SNCC) sewer system was coming, property owners and developers invested time and money on plans that not only conform to the requirements and restrictions of the UDC, but also, are dependant upon the sewer system. There are now approved plans that are contingent upon the anticipated sewer system. The New Castle County Vocational-Technical School District has a sorely-needed high school planned for the area that will require the sewer system.

Now, some residents in Southern New Castle County are trying to stop development by stopping the SNCC sewer system. They are trying to convince their new Councilperson Patty Powell to oppose the sewer system and to rezone all the undeveloped land to require minimum two-acres lots for any future development. Council and the Administration have had uneasy talks regarding the future of the SNCC sewer system. The Administration presented four options to Council: proceed as planned, build only the core of the planned sewer system, enter into a public/private partnership, and stop the process and do nothing. Council has asked for more information, specifically the financial ramifications of each choice.

The Administration sees the annexation issue as crucial to determining the future of the SNCC sewer system. Because of annexation and the tougher requirements of the UDC, development is moving to the municipalities. Unless there are changes to the annexation process or to the strictures of the UDC, the administration anticipates insufficient development to support the SNCC sewer system. Ron Morris, the County's Chief Financial Officer, has indicated that a sewer fee increase will be required within the next several years to support the expanded sewer. Even though New Castle County has one of the lowest rates on the Eastern Seaboard and the absolute rate increase would be quite low, the percentage increase scares officials.

Coincidentally, even though she is new to Council, Councilperson Patty Powell has been named Chairperson of the important Land Use Committee (replacing Bob Weiner), and Bill Tansey has been made Chairperson of the Special Services Committee. Land use and sewer issues are among the most important facing economic development in the County.

Tax Dollars For Attorney's Fees

At its February 25th meeting, a divided Council approved Ordinance 03-015 intended "to clarify" "rectroactivity" for payment of legal fees incurred "by any County officer or employee in a legal proceeding, a civil or criminal investigation, or in a civil action, arising out of or related to the performance by such officer or employee of his or her public duties."

The Minner Administration FY 2004 Budget

The Delaware Economic and Financial Advisory Council (DEFAC) has projected a $300 million gap between projected revenues and expenditures for FY 2004. Governor Ruth Ann Minner has presented a FY 2004 Budget that proposes $155 million in program cuts and $145 million in new revenue. The FY04 program cuts follow $200 million in cuts which the Governor has already made since taking office in January 2001. The revenue increases include a 17% increase in corporate taxes and fees, expected to generate $89 million; a 26-cent increase in the cigarette tax, generating $23.5 million; "decoupling" from the federal elimination of the estate tax, generating $14 million; and increasing the State's take from video lottery by 8%, generating $16 million.

The franchise tax was raised by 31% in 1984, during the du Pont Administration, and by 43% in 1991, during the Castle Administration. The Minner Administration consulted with the business community, including The Committee of 100, before determining that a 17% increase, given the circumstances, was reasonable and fair. The consensus was that the 550,000 corporations and other entities that incorporate in Delaware are drawn far more by the State's legal structure, Chancery Court, Division of Corporation Service, and responsive General Assembly, than by its fee structure.

Delaware's per-pack cigarette tax is now one of the lowest in the nation, at 24 cents. Of our surrounding states, New Jersey is at $1.50, Pennsylvania $1.00, and Maryland $1.00. Governor McGreevey has proposed an increase to $1.90 in New Jersey, and Maryland and Pennsylvania are considering additional increases. New York City last year added $1.50 to New York State's $1.50. The overall state average is 60 cents per pack, drawn down by the tobacco states of Kentucky, Virginia, North Carolina, South Carolina, Georgia, and Tennessee, which average 8.2 cents per pack. Many non-tobacco states are considering further increases.

"Decoupling" from the federal elimination of the estate tax is in response to the federal elimination of the state credit which, prior to 2002, allowed state estate taxes to be deducted from the federal liability. The Minner proposal will apply the 2001 Delaware tax rate of 2-18% to federally-taxable estates, which in 2003 is one-million dollars, in 2004 $1.5 million, in 2006 $2 million, increasing to elimination in 2010. If, as anticipated, all or part of the federal exemption is made permanent before the 2011 reversion, Delaware will have to revisit its code. The $25 million Delaware receives annually from the estate tax comes from approximately 300 estates, with 90% coming from the 50 largest estates. Twenty states have already decoupled from the estate tax and additional states are considering decoupling.

The video lottery increase would come only from increased revenue from expanded hours and machines.