The General Assembly clears a bill that would allow Newark to levy a $50 per-student, per-semester tax on the University of Delaware (UD).
The Newark City Council voted unanimously to collect the tax early last year, but the city needs legislative approval from the state to amend its charter.
That charter change cleared the State Senate Thursday, now only awaiting signature from Gov. Matt Meyer to become official.
If signed, it will be up to the city council to officially enact the tax, which is expected 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 the City Manager Tom Coleman has testified 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.
"Residents of Newark are increasingly frustrated by the financial burden they are carrying — property taxes increased 5% in 2022 and 7.5% in 2023. Water and sewer fees have also risen repeatedly in the town," the bill's sponsor President Pro Tempore Dave Sokola (D-Newark) said.
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.
“This legislation is about equity, sustainability and accountability, and Newark City Council sees this measure as critical to its financial health," President Sokola said.
Although not a requirement of the legislation, the tax is likely to be passed down to the students as a fee, which some UD students have spoke in opposition of throughout the bill's progression in the legislature.
"The University of Delaware and the City of Newark have a shared interest in the city’s betterment, financial viability and overall strength. We are understanding of and sympathetic to the city’s needs, which — in many ways — reflect ours, due to inflation-induced costs and other financial pressures," the University of Delaware said in a statement. "Legislative partners here in Newark and throughout the state have long recognized the University of Delaware’s profound economic impact on the state, exceeding $3.2 billion in total annual output. We prepare students, including thousands of Delawareans, for success in their professions, communities and beyond. Our goal is and remains centered on providing an accessible and affordable pathway to a UD education for our students — those who contribute social, cultural and economic value to the City of Newark."
The bill passed unanimously in both chambers among members present.
