The Delaware General Assembly advances legislation that would allow the City of Newark to levy a $50 per-student, per-semester tax on the University of Delaware.
The new tax is estimated to bring in over $2 million for Newark as the city faces a $6 million budget shortfall.
The university has been tax exempt since 1915, which City Manager Tom Coleman explains leaves UD exempt from the two primary means of raising taxes — property taxes and real estate transfer taxes.
Additionally, 42% of the city's properties are tax exempt and 37% of that is because of university-owned property.
Coleman says if UD properties were to be taxed, the city would bring in around $5.8 million — almost completely covering the budget shortfall. Newark currently brings in around $9.75 million in property taxes annually.
In 1965, the University of Delaware began paying the city $120,000 in lieu of taxes and added an annual $60,000 to support public safety efforts in 2001 — neither of these payments have increased since their inception.
Coleman explains despite the university having its own law enforcement, the Newark Police Department, which makes up almost 60% of the city’s operating budget, must respond to all off-campus concerns.
“When those students are in town, they're our responsibility. It's our job to look out for them when people are coming to town to look for a soft target, you know, an 18 year old that just moved out of their house that doesn't have experience and wisdom and things like that. So our police see a lot of activity driven by trying to keep their students safe," Coleman said.
State Rep. Cyndi Romer (D-Newark) introduced the bill into the General Assembly after the Newark City Council unanimously approved the tax change.
State lawmakers' approval is needed for the tax due to a change being necessary in the town's charter.
Romer says with the town nearly doubling in size when students come, the financial impact on the roads, bike trails, parks, infrastructure and police needs to be addressed.
“Residents of the City of Newark have already had to take on the burden of supporting the town. They've had their property taxes increased, their water increased and really what they're looking for is UD to pay its fair share," Rep Romer said.
Although not a requirement of the legislation, the tax is likely to be passed down to the students as a fee, but Romer argues — as a UD parent herself — $100 a year is reasonable to support the town’s infrastructure.
Although graduate students from UD publicly testified that they feel differently.
"All 4500 graduate students either live in Newark, Wilmington or another nearby city. Although the majority of us do reside in Newark, that means that when we pay our very expensive rent to live in Newark, we are contributing to Newark because the property taxes for the apartment or house we rent are passed along in our rent," President of the Graduate Student Government at the University of Delaware Max Bobbin said, noting graduate students are not allowed to live on campus. "What this bill would do is punish graduate students for attempting to attain a higher education. It would require us to pay more than our fair share of taxes to Newark, simply because we are affiliated with the University of Delaware. It would also tax graduate students who live in another city or another state, requiring citizens to pay taxes for a city whose resources they do not use.
During the bill's first committee meeting, some Republican representatives raised concerns over a provision that would have allowed the tax to automatically adjust annually using the Consumer Price Index for all Urban Consumers (CPI-U).
"If we go through another period like we went through of large inflationary pressures, yes the city faces numbers, but now we're looking at what was essentially $100 for spring and fall has now become $200 a year," House Minority Whip Jeff Spiegelman (R-Clayton) said. "Without really any way for the University of Delaware to remedy that situation outside of convincing the City of Newark to lower the fee."
That provision was ultimately removed via an amendment introduced by State Rep. Rich Collins (R-Millsboro) on the House Floor.
The tax bill passed unanimously on the House Floor with one abstention. It now awaits consideration in the Senate when lawmakers return from spring recess in early May.
