Potential Tax Change Worries Del. Cities and Counties - WBOC-TV 16, Delmarvas News Leader, FOX 21 -

Potential Tax Change Worries Del. Cities and Counties

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DOVER, Del. (WBOC) - Counties and towns in Delaware are very concerned about a proposal coming out of Legislative Hall in Dover as the state's budget-writing committee is finishing up its work on next year's budget.

The state has to fix a nearly $30-million budget gap. Part of the plan to do that, which has gotten preliminary approval, would cost cities and counties statewide tens of thousand, and in some cases millions, of dollars.

Leaders at the local level aren't happy about that.

The real estate transfer tax is a tax that you pay on the sale of property. Right now the state splits the money that brings in with the city or county where the property equally.

it's a three-percent tax. The state gets 1.5 percent. The city or county does,too.

Now lawmakers have potentially changed the split to two percent for the state, one percent for the city or county.

Dover Mayor Robin Christiansen says if it had impacted the 2015 budget, this would have cost his city more than $500,000.

"It's going to have a horrendous impact on the city of Dover, as well other municipalities and counties throughout the state of Delaware," he said. "I think it's the state taking advantage of us."

Christiansen says he's lobbying hard at Leg Hall for this not to happen.

Cities and counties are supposed to use the money from this tax for public safety.

"The majority of the tax revenue we receive is applied toward public safety," Mike Petit De Mange, Kent County Administrator, said. "And roughly one-third of the money we receive is applied to capital projects other than public safety."

Petit De Mange says this year's county budget gets about $4 million from the tax under the changed formula that number would be more like $2.5 million.

The state is stealing from the residents of Sussex County by doing this," said Sussex County Councilman Rob Arlett.

He says 84 percent of the money Sussex County gets from the real estate transfer tax goes to public safety. It was about $22 million this year, so the change would have cost his county about $7 million.

Lawmakers also just cut $1.2 million from the state budget for extra state police troopers in Sussex County. Arlett says that money funds 22 troopers.

"Public safety has become a political football," said he said.

The tax change potentially saves the state $20 million a year. It would take effect in July 2016 if the plan gets final approval from the full general assembly.

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