Newark officials have withdrawn a proposal for a 1 percent tax hike in 2021.
The tax hike would have generated $39,000 in 2021. A reduction in employee health care costs will help make up for not having that additional revenue, as the premium renewal cost came in lower than expected, according to city spokeswoman Jayme Gravell. The city will also reduce a capital project by $20,000.
The tax increase was proposed by City Manager Tom Coleman on Oct. 6 as the city continues to feel the impact of the pandemic and the economic downturn.
Officials are projecting a revenue decrease of 2.4 percent, mostly due to a drop in utility sales related to the University of Delaware moving much of its operation online and some businesses remaining closed. Other expected revenue decreases include parking fees, lodging tax, traffic fines and parks and recreation fees.
Meanwhile, officials have made a number of cuts by keeping vacant positions open, combining two positions in the administrative department, reducing or eliminating training and business travel and freezing contractual spending.
While much less than the 13 percent tax hike approved last fall, the proposed increase drew criticism from Mayor Jerry Clifton and several council members, who said that this year – when many residents are facing economic struggles due to the pandemic – is not a good time to raise taxes.
At a recent council meeting, which was held virtually, Clifton expressed his gratitude to Coleman for finding a way to eliminate the need for a tax increase.
“This is one time that I’m really sad that this isn’t being live-streamed because I’m smiling from ear to ear,” Clifton quipped, referring to the fact that the broadcasts of council meetings are audio-only.
Meanwhile, officials are still proposing slight increases for water and sewer service. If approved, the average resident would pay a total of $24.48 more to the city next year.
The increases are to cover increased debt payments as a result of the 2018 referendum, when voters overwhelmingly authorized the city to borrow more than $27 million for the Rodney stormwater pond and other capital projects, with the understanding that the loan payments would be paid for by increased taxes and fees.
Council will discuss the budget again Nov. 2, when it will hold a public hearing and a possible vote.