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Information on Finances in Government in N.C.C.

From the Minutes of the April '05 Civic League Meeting

Remarks by Michael Strine, the Chief Financial Officer for New Castle County:

All money that passes through from federal grants to and from the State to the County is subject to being audited by the State Auditor.

He spent four months on the Coons Transition Team. Accounting is not the same among the public systems, so although his background is in government he said has had to learn the County’s as he goes along. He welcomes public input. They used an independent accounting firm to check on things that were not clear in County finances when Coons took over. The books are in good shape, but there is a growing structural imbalance. He said the County is spending more than it is taking in. County government has grown 33% since 2000 and what we have taken in has grown only 8%. We will spend $17 million more this year without handing out all the Gordon-promised grants. They could result in a $40 million shortfall. If we keep it up, we will have a shortfall of $150 million eventually. We are now drawing down on revenues. Record real estate transactions created the reserves Gordon claimed to have. The Court of Chancery ruled that some of the reserves were not legal in the form used by the Gordon Administration. Council made them legal, and they have worked with Council to get them properly handled.

The County will have to draw down on stabilization reserves this coming year. It must adopt responsible budgets in order to get this situation under control. Coons started with a 6 1/2 % increase proposed by the former administration. They worked the increase down to 3½% in this year’s proposed Budget. That means markedly few new initiatives. They included (1) an Office of Redevelopment. (2 ) To deal with the paramedics shortage., a Hometown Heroes Program will provide housing assistance to get people to take these jobs. (3) Create a Book - to help libraries. The Budget contains a given 74% spent on salaries, benefits and people. There was a 12% growth in County employees. They will be saving 2 million by holding down hiring. The cost of health care is running up 16.7%. Because of the pensions, benefits and raises built into the Budget and the under performance of the Stock market, funding each employee is costing more. Another problem is that 5 of 6 labor contracts have expired and that will drive up personnel costs. External and internal review and accountability should help during this process.

Strine welcomes public scrutiny of County finances. He said, “We can check each other’s math and help make sure things are being done right. We have to identify ways we can save money.” He identified: (a) Old gas-guzzling cars abound in the County fleet. Almost every employee has one. (b) Off-site storage of County records is being paid for. (c) We are subsidizing the Butler’s Pantry at Rockwood. (d) It costs a lot of money to mail to both the mortgage companies and lot owners the bill for real estate taxes.

Strine believes they have to improve long range fiscal planning. “We need efficient prioritizing. There is a backlog of budgeted, but unspent capital funds. The Sewer Fund must become self-sufficient. It is a business.” Customers will ultimately pay the fees, so he figures they might as well set fees by who uses services the most. A $171 to $234 increase in sewer fees is looming; however, residents will be able to pay bills in two parts. The Senior Property Tax Credit Program will be continued. A mutual education process will be started with employees, the public and contractors. The Land Use Department is proposing to raise its fees. They need to get them in line with their actual costs. That will be advertised this weekend.

We have the third lowest taxes in the country according to our CL President..

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Posted: FLR -