Lawmakers are heading back to Dover.
Delaware's House and Senate are set to convene a special session this summer in the wake of public frustration and angst over the first New Castle County tax bills to follow property reassessments. Leadership could not yet share a firm date, though it's expected to fall within the next few weeks.
The somewhat bipartisan charge is likely to coalesce around one of the largest issues at play right now: school taxes and residential tax burden.
After the reassessment process finished earlier this year, every one of Delaware’s school districts had to adjust school tax rates. In New Castle County, rates had to “reset” with average taxable values ballooning by nearly 400%, while code allowed schools to realize gains in tax revenue up to 10% over the previous year.
Simultaneously, the first reassessment in over 40 years for Delaware's largest county managed to thrust a much heavier tax burden onto residents. That's homeowners, condo owners, land owners, the like.
Their property values "skyrocketed" in reassessments by Tyler Technologies, while non-residential values — say commercial property, large companies or other utilities — increased at a much lower rate on average. That means many, but not all, businesses actually saw tax bills go down. Various factors apparently led to this, some within the control of local governments, with most based on "revenue" reassessment methodology applied to commercial parcels and economic changes since 1983.
In New Castle County, residents' share of tax burden stood to balloon from 66% to about 75% in initial figures, as County CFO Jill Floore explained to council. For Wilmington alone, officials estimated residents would make up 57% of the new tax base, while businesses and commercial properties made up 29%.
To address this, the city and county created split rates for residential and nonresidential properties for the first time. The county said it basically looks to ease the burden, as it holds residential properties at about 69% of base. The average county bill went up about $23.
School districts did not do this. They never have in Delaware. And most CFOs would argue that state law does not clearly allow for the move, while districts and the county were given incomplete data from Tyler Technologies and a tight deadline to reset tax rates across the state.
That also means — regardless of how school districts adjusted their tax rates on top, which they did — many residents were already set to be clobbered with higher debt owed in taxes this month.
Deeper on school decisions: How are your taxes changing in New Castle County? Delaware schools take reassessment boosts
"Property reassessment shifted the weight from commercial taxpayers over to residential taxpayers by a huge number," Christina CFO Bob Vacca said. "As a result, we've got resident taxpayers shouldering the burden when commercial taxpayers got a huge cut. And yes, that's being disguised as: 'Well, Christina just jacked-up the taxes.'"
Now, lawmakers could have something to say about it.
Theoretically, per conversations with CFOs and lawmakers, the General Assembly could consider legislation to empower districts to split rates, as well as reconfigure bills. Vacca informally estimated his team would need about five to 10 days to run the numbers and return them to the county for reapplication.
"Give me a commercial and residential rate," Vacca said. "Let me reset the rate so that we can fix this problem."
Then, new rates would be sent to the county to reconfigure bills. Again, that does not mean most bills would no longer come with increases, but it could mean increases are less sharp. The county could then send out new bills, or keep the difference as a credit. That would also be up for discussion, most likely.
Obviously, all of this leaves many questions to sort out.
For now, inflated bills are still due by the end of September.
Relief and split rate: New Castle County pitches tax payment plans, as frustration brews over spiked taxes
What's to come in Dover
Time will tell what lawmakers set as priorities in this special session.
By late last Friday, July 25, Delaware Republicans had already sought to "urge" lawmakers to call such a gathering. A press release pointed to previously filed legislation aiming to cut the 10% allowance, meant to be used as coverage of delinquencies and other unknowns, unless used in hindsight.
GOP lawmakers also lifted up another previously filed bill looking to require future reassessments to occur every 10 years, not five.
On the morning of Monday, July 28, Republican Rep. Mike Smith also penned a letter to the State Auditor calling for a "forensic audit" of Christina School District, related to the 10% revenue increase projected. It somewhat echoes answered calls for a different "special inquiry" into Appoquinimink taken up by Lydia York, after the district took the 10% to cover budget shortfalls. The same morning, Vacca told Delaware Online/The News Journal he welcomed the scrutiny.
Locally, New Castle County Council introduced an ordinance on July 23 to allow flexible payment plans for residents on property tax bills, similar to offerings during the COVID-19 pandemic, with eligibility based on increased tax liability. That should be discussed in a special council meeting at 3 p.m., Aug. 5.
But as it stands, that could only be applied to county bills. The largest portion of every bill, as usual, relates to school taxes.
With all money flowing through the county, lawmakers could potentially consider crafting legislation to allow the county to offer such payment plans, and lack of penalties, to ballooned school tax payments, too, Vacca said. How to pay for it remains an open question.
If lawmakers postponed tax payments, or even sought an audit into Tyler Technology results, Vacca noted code supports the state seeking a commercial loan to cover districts and ease the immediate impact on taxpayers. This and more have yet to be discussed officially.
In terms of any reform pursued, he said: "The faster we do it, the better off we will be."
This is a developing story, and more information will be added as it becomes available.
What do you want to know about reassessment or reforming the process? Contact Kelly Powers at [email protected].
This article originally appeared on Delaware News Journal: DE property tax increases prompt lawmakers to call special session
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