This story is ongoing and will be updated with further comments from state leaders throughout the day.
Speaker of the House Melissa Minor-Brown (D-New Castle) is calling Delaware legislators back to Dover on August 12 to discuss relief efforts for residents affected by the recent property reassessment process.
"Although we, the legislature, did not make this mess, we cannot just turn a blind eye to it," Speaker Minor-Brown said. "It's our duty to figure out how to provide relief to our constituents. I know that it was court mandated to do the reassessments, and it hand't been done in decades, but when people are receiving bills that are double and triple what they were paying just last year, that can be tough on folks."
Speaker Minor-Brown is referring to a lawsuit settled in 2020 between the state and Delawareans for Educational Opportunity and the Delaware NAACP.
The plaintiffs argued the state had been aware of deficiencies in educational resources for low-income students, English language learners and students with disabilities and had not adequately addressed those disparities. Part of the organizations' arguments were that the First State was utilizing an outdated mode for valuing property, leading to funding inequalities within Delaware schools.
In 2021, all three counties agreed to conduct a reassessment of their residential and commercial properties. The last time the counties conducted a reassessment was between the early 1970s and late 1980s.
State law requires reassessments to be conducted with revenue neutrality in mind, meaning tax rates are supposed to be adjusted in tandem with the new property values to ensure counties are bringing in close to the same revenue as they were prior.
This means some property owners have only seen small fluctuations in their taxes as the reassessment processes has wrapped up in recent months, but several properties have been appraised at a much higher rate than their last appraisal decades ago, which has led to significant tax increases for some homeowners statewide.
In addition to general concerns expressed by property owners around these increases, the Appoquinimink School Board made headlines earlier this month when it approved a 10% operating tax increase to help cover costs for mistakes made by its former finance director.
The school board is taking advantage of a Delaware law that allows school districts to realize a total revenue gain of up to 10% following reassessment — the increase is expected to bring in over $5.2 million in new revenue, which will cover the district's anticipated close to $1 million shortfall for payroll requirements.
While State Auditor Lydia York is looking into the financial mismanagement that lead to the shortfall, State Rep. Mike Smith (R-Pike Creek) is advocating for legislation that would help mitigate instances like these.
Rep. Smith takes concern with current reassessment law allowing schools to impose tax hikes without undergoing the referendum process, and his proposal would require that school districts collect the same total revenue after reassessment with two caveats.
The first would allow districts to increase revenue after a reassessment but limited solely to situations where they would be facing a projected deficit and only to the extent needed to balance the budget — any potential increase would be capped at 10%. The second would make the bill retroactive to July 1, 2025, which would set aside the Appoquinimink School District's decision to initiate a 10% tax revenue increase.
“To be clear, this would not usurp Appoquinimink’s authority,” Rep. Smith said in a statement. “The board would still be able to increase revenue under this bill, but only to the degree that it keeps the budget out of the red, and they would need to provide specifics backing up their claims.
Appoquinimink isn't the only district implementing the 10% hike — the Christina School District announced the same approval just weeks ago.
This isn't the first time Rep. Smith has tried to address this "loophole" through legislation, bringing a similar bill forward in 2022 and in 2023.
He says he tabled the most recent iteration of the bill when it became clear it wouldn't get enough Democratic support.
"I asked for it to be tabled because it was going to be shot down if I didn’t, and so I tabled it so we could bring it back, and the whole point of why they did not want it at the time was saying I was putting the cart before the horse: 'We don’t know how it’s going to affect the school districts. We don’t know how it’s going to affect residents.' And it’s always been kind of my point of, 'But let’s be proactive,'" Rep. Smith said.
When asked for her thoughts on Rep. Smith's proposal, Speaker Minor-Brown says she wants to thoroughly read through the bill to grasp its intentions fully, but she says, as of now, her understanding is that school districts are against it.
"So I need to understand why, and it's going to take a conversation with the attorneys, obviously with with Rep. Mike Smith. I can't promise you that that's one of the bills that we will pass in special session, but I'm definitely looking into it. I know there's a retroactive piece of [the bill] that does concern me because one thing we don't want to do is create more harm than good when we're trying to pass legislation," she said.
But Rep. Smith argues it's not about the school districts, it's about the constituents.
"I don’t really care what the school districts think. I’m more worried about the residents, and that’s who I represent. I think what this goes to is a structural conversation on how we fund schools and what’s broken about it," he said. "If they need it, show us why you need it. Let’s dive into the data and show us. Let’s not just say you need it because if it’s for a budget shortfall, you already knew of that shortfall. You shouldn’t be raising it for anything else."
The Republican caucus is also advocating for the passage of a bill from State Rep. Kevin Hensley (R-Townsend) that would change the frequency of the reassessment process.
Two years ago, the legislature approved reassessments to be conducted at least once every five years, but Rep. Hensley's proposal would change that requirement to every 10 years.
“Having no deadline on reassessment didn’t work well, but setting it to take place every five years basically means we’ll be in constant reassessment mode,” Rep. Hensley said. “Moderating to 10-year intervals will save millions of taxpayer dollars, reduce stress on citizens, and still provide timely valuations. Just as importantly, if the legislation to eliminate the option the schools have to boost their total revenue every reassessment is not enacted, my bill will halve the opportunity for surprises from twice a decade to once.”
But Speaker Minor-Brown says it may be too soon to tell how often is often enough.
"I mean, we waited 40 years and look where it got us. So I'm not sure if extending that time frame further out than where we are now with the five years would really help people in the long run," she said. "I think five years is actually a good time frame right now because people can expect it every five years. And maybe that's something we need to do a public polling on to see how people feel about it."
As far as Democratic initiatives, Speaker Minor-Brown says State Rep. Kim Williams (D-Stanton) is working with leadership to craft a bill that would allow school districts to split their tax rate to tax non-residential entities at a higher rate than residential, which is something counties are legally allowed to do.
Rep. Smith noted he is in full support of Rep. Hensley's bill and Rep. Williams's bill.
Without getting into specifics, the speaker says there are a few other proposals on the table for immediate relief for constituents in relation to the reassessment process.
Senate Democratic leadership expresses a similar sentiment, saying in a statement they will be looking into multiple solutions and support Rep. Williams's initiative: "We are working on a combination of approaches that would restore common sense and fairness into this process, including legislation that would make it clear that school districts have the authority to set separate tax rates for non-residential properties.”
The speaker also raises concerns over if the reassessments were conducted in an equitable manner: "This fall, leadership is going to be digging a little deeper into the county reassessments and Tyler Technologies to understand that process because right now, it's looking like that process was not equitable. The results are not equitable."
Gov. Matt Meyer told members of the press he believes the legislature is making the right decision calling for a special session.
"As county executive, I committed to a revenue neutral reassessment, [New Castle County Executive] Marcus Henry has agreed with that and also has agreed to a revenue neutral reassessment. The problem is largely on the school tax side, and we're working with the state legislature to do everything we can within the law to address it," Gov. Meyer said. "It's also important to note that that whereas in past years, elected officials have total control over the reassessment, because it's under litigation, I think the judicial branch has a fair amount of control and responsibility in what happens, which mucks it up a bit. It makes it more challenging to deliver to residents of our state what they really deserve."
Gov. Meyer says he hopes the special session ultimately results in relief for taxpayers facing "outrageous" tax bills.
House Republican Leader Tim Dukes (R-Laurel) says in addition to Rep. Smith and Rep. Hensley's bills, more legislation is coming down the pike.
"We’re going to be looking at some other things. There’s other legislators that have ideas, and so there will be a lot of legislation that will be fleshed out over the next few days trying to address the issue within the state as we deal with this," Rep. Dukes said, noting he has already been in talks with school districts in Sussex County to discuss potential impacts.
As far as tackling Delaware's personal income tax structure, an idea that was floated throughout this year's legislative session as a way to raise more revenue for the state, Speaker Minor-Brown says adding new tax brackets will likely not be a topic of discussion this special session.
"I'm not sure if we're going to address it in August, but I will say that increasing brackets is not off the table. But the one thing I have to put out there is that we have to do it in an equitable way," she said.
As of now, the speaker is anticipating the special session to only take one day.
