The City of Newark tables a rental gross receipts tax for the foreseeable future to explore other solutions to its budget shortfall.
Council voted 4-3 Monday night to table a resolution to start the process of levying a controversial rental tax that passed last month.
City Manager Tom Coleman says many landlords raised concerns that council members did not understand what they were voting for, so putting the tax back on the agenda allows any questions to be answered, and helps the city avoid lawsuits.
And Mayor Jerry Clifton says getting the resolution to Dover for General Assembly approval this session was starting to look unlikely.
“It just occurred to me that this wasn’t ready for prime time," Clifton says. "We needed to back off of it and have more conversations with some of the stakeholders, investigate some of the other ideas and see where that takes us in the coming months.”
But Coleman says other options to bolster the city’s budget have also been suggested.
“People use credit cards for everything and we pay a processing fee on all of them," Coleman says. "So historically, we have absorbed that cost and it just gets built into the rate. And that is part of the discussion is whether or not we want to continue absorbing the costs. I think the number is around $1.1 million. Of that, a more precise number for the university’s utility bill is about $350,000.”
Coleman adds a trash collection fee could also be considered, the city currently does not have one, but the last time it came up in 2018, it was met with heavy opposition.
“Our refuse service costs the city, without looking at the budget, probably around $2-2.5 million to provide," Coleman says.
He says a trash fee for residents would come out to about $350 per year.
Clifton says at council’s next meeting on May 20 they will discuss the possibility of raising needed revenue with a trash collection fee and credit card processing fees for city services.
He adds council will still seek approval for a student tax on the University of Delaware and PILOT funds from the state.
With all of those measures, Clifton says the city could close about two-thirds of its budget gap and avoid a 30 percent property tax hike.
