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To balance Dover's budget, City Council weighs property tax hike

Delaware Public Media

Dover's City Council is weighing a 24 percent property tax increase as it works on balancing a budget for the next fiscal year.

City administrators see the hike as a lasting way to offset falling revenues and rising staff costs.

The city needs to close a $2.1 million gap in its general fund before the fiscal year starts July 1. The gap comes in part from the cost of hiring 10 new police officers, a move aimed at reducing crime downtown, along with rising expenses for health care.

City manager Scott Koenig also says some general fund revenues are declining -- areas like red light camera tickets, and city fees for new construction.

"In the recession, those numbers have come down significantly and it's affected our operating budget," Koenig says.

The property tax hike from this year's routine reassessment would only raise taxes about a cent on its own. But Koenig wants to bring that up to an 8-cent hike to cover the budget gap.

Dover's City Council isn't always amenable to tax hikes -- last year, it chose to balance the budget with money from the electrical fund instead. Koenig says that led to a proposed 3 percent increase in electric rates for 2016 -- and it wasn't a permanent fix for the city's budget woes.

"My side, and the finance director, we have been advocating for a tax increase for a couple of years," Koenig says. "Because we feel like we've kind of hit the end of the road with other ways to balance the budget."

In discussions so far, Koenig says council members have favored a tax hike over cuts to services or city maintenance. Their alternative would be other fee increases -- but Koenig says those aren't as guaranteed to come through.

"Property tax revenue is a very stable revenue because you bill it annually, it's based on property valuation, and people are legally required to pay their property taxes," he says.

The full hike would balance a budget that includes the added police, plus a staffer to help run Dover's new downtown development district. It would also cover capital projects like a million dollars of city paving for each of the next five years and other preventative maintenance.

City council is set to continue budget talks through Wednesday night. They'll have to put a plan to a first reading at their regular meeting next Monday to pass it before the start of the fiscal year.

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