DOVER, Del. -- Although Delaware itself does not have a statewide property tax, some residents are concerned efforts to address a projected $350 million budget shortfall may result in higher tax rates from counties and municipalities.
Gov. John Carney has said he is open to various revenue options amid spending cuts but has said he would prefer to not burden county and local governments through measures to balance the state budget. He is expected to make a formal budget proposal later this month.
Among the budget proposals made in January by outgoing Gov. Jack Markell (D) was giving the state a larger share of the realty transfer tax, which stands at 3 percent and is applied to many property transactions. Under that proposal, the tax rate would be increased to 4 percent, with the state receiving 2.75 percent instead of the 1.5 percent it currently receives.
The proposal also called for major changes like placing the entire financial responsibility for paramedic services on counties and increasing how much they would need to contribute to school bussing services. In turn, some worry the cost of maintaining those services may require counties, towns, and cities to bring in more revenue through taxes.
Carney has not committed to any particular tax proposals or spending cuts during town hall meetings around the state but uncertainty following Markell's proposal has caused some people to worry actions at the state level might have financial effects that trickle down to local governments. Additionally, he has pointed out that Delaware remains very competitive when it comes to other states in terms of property taxes.
Wyoming resident Lucinda Davis hopes the state considers cutting costs before placing a higher burden on towns and counties, which she believes could lead to local tax increases.
"I'd just tell them to cut back on something else," she said.
Hank Wells of Camden said he isn't too concerned about the issue of taxes going up because he said the cost of living is rising in many places. He said when relatives have visited from other states they are surprised to find Delaware's rates are lower than their local ones.
"They're up way, way high compared to what Delaware is," he said.
Delaware Association of Realtors President Bruce Plummer said he doesn't believe minor property tax increases will affect home sales, because the state enjoys natural advantages like beaches, modern hospitals, and no sales tax.
However, he said major changes could affect perception of prospective residents.
"We want to be careful that we don't do anything that would make Delaware less desirable and curtail home sales because home sales drive the economy," he said.
