Newark residents are all but certain to face higher bills from the city next year, but the exact amount and configuration is still up for debate.
During a four-hour budget hearing on Monday, city council debated numerous strategies for closing the budget shortfall, narrowing it down to three options.
The first option is to start charging residents a separate fee for trash collection. The approximately $11-per-month refuse fee would be accompanied by 2.1 percent property tax hike, a 1.25 percent water rate increase and a 0.5 percent sewer rate increase – all increases that were previously planned as a result of the capital referendum approved by voters in June 2018.
The second option drops the proposed refuse fee but consists of 9.3 percent tax hike, 5.8 percent water rate increase and 4.7 percent sewer rate increase.
The third option covers the shortfall entirely with a tax hike, though officials have not yet revealed what percentage the increase would be.
Newark spokeswoman Jayme Gravell emphasized that officials are still crunching the numbers based on cuts and other changes requested by council, and the exact figures could change before the final vote.
Officials have not yet released detailed calculations regarding how each scenario would affect residents’ bills. However, in general terms, homeowners would see the biggest increase with the trash fee because only people who get the city’s trash service would be charged. The argument for that, officials say, is that the people who receive trash service should be the ones paying for it.
Meanwhile, balancing the budget with tax and or fee increases would spread the cost out over a broader constituency, such as businesses and out-of-town water customers.
Council will vote on the $97.6 million budget Nov. 18.
Newark faces a $1.3 million budget shortfall.
As usual, the biggest driver of the increase in expenses is personnel costs, which are up 5.7 percent, or $1.9 million over this year. That includes contractually obligated salary increases, rising health care costs and increased pension obligations.
Council made a few cuts Monday by delaying capital projects, such as buying equipment and extending fiber internet to the George Wilson Center.
“Our budget is as lean as we can get it without cutting services,” Councilwoman Jen Wallace said.
City Manager Tom Coleman and Finance Director David Del Grande first proposed the trash collection fee last month.
Each year, the city spends $2 million on residential refuse collection. However, approximately 20 percent of residents’ property tax bills aren’t high enough to cover their share of the cost of garbage collection, let alone the other city services residents receive.
“It’s all about equity and fairness,” Del Grande explained.
Originally, they proposed charging each resident a $25-per-month trash fee, which would have covered the entire cost of trash collection. They have since reduced it to $11, which is just enough to cover the shortfall.
Several council members said they received backlash from constituents upset about the trash fee.
Councilwoman Sharon Hughes said implementing the fee would “erode the trust of our residents.”
“I’ve had so many residents come to me,” Hughes said. “Halloween night I thought it was a trick-or-treater, but it was a resident. She was almost in tears and told me, ‘I need you to fight this fee.’”
Councilman James Horning Jr. agreed.
“I don’t think we’re ready for a refuse fee,” Horning said.
Meanwhile, council rejected a proposal that would have increased electric bills in order to purchase more renewable energy.
Currently, 16.5 percent of the electricity Newark purchases and resells to residents comes from renewable sources such as solar and wind. Officials proposed increasing that to 50 percent renewable, which would mean the average resident would pay an increase of $2.68 per month or $32 per year. The money would have gone toward purchasing renewable energy credits from entities that install wind or solar generation facilities.
“I certainly believe in the principals of green energy,” Councilman Jason Lawhorn said. “But we’re paying significantly more to buy credits of green energy. We’re using the same electrons but we’re going to buy something that says that my electric came from that wind farm in Pennsylvania or the solar farm in Harrington or whatever it is. Those electrons produced by that green energy are going to be out there in the grid and used by somebody no matter what, but through this green energy program, we’re just going to pay more for that.”
He added that he would rather the city invest money in its own green energy production, an investment that could help the environment and ultimately lower the cost of energy. Council is slated to have a broader discussion of green initiatives Dec. 2.
Council also indicated support for raising the permit review fees charges to developers and directed staff to devise a way to charge fees to customers who pay their bills with credit cards.
Credit card companies take a small percentage of the amount paid, which costs the city approximately $1 million per year. The city’s largest utility customer, the University of Delaware, accounts for $400,000 in credit card fees.
The credit card fee plan will take a few months to develop, but charging a 2 or 3 percent fee for paying by credit card will recoup the costs or encourage customers to use a different form of payment, officials said.