When does a vote not to raise taxes cause a stir?
When it happens in a place like Delaware County.
In the last big decision of the GOP’s century-plus-long tenure controlling the Delaware County Council, Republicans voted Wednesday to pass a $358 million operating budget that includes no tax hike for county residents for the sixth year in a row.
In voting against the budget, Democrats accused Republicans of punting on tax increases now by dipping into reserves, as the council has done for the last few years.
“The whole thing seems an effort to force Democrats into a bad spot where we’re left with a bankrupt county and they can point to us as being the reason that it happens,” Brian Zidek, one of two Democratic council members on the five-member board, said last month.
At Wednesday’s meeting, fellow Democratic Council member Kevin Madden called the spending plan “the kick-the-can budget.”
Council member Michael Culp, a Republican, fired back, asking Madden for his suggestions for what the council should do with the budget and “not just bad-mouth us for doing something we’re proud of.”
Pennsylvania’s counties have to finalize their 2020 budgets by the end of the year, unlike the state, which operates on a fiscal year that ends in June. Commissioners in Chester and Montgomery Counties are scheduled to finalize their budgets Thursday, and Bucks County commissioners follow next Wednesday. In several cases, those decisions are being made by outgoing commissioners who will leave or lose their seats next month.
Budgets must be balanced; the proposals in both Montgomery and Chester Counties do that. Bucks County, however, is struggling to find ways to fill an anticipated $16 million deficit next year. Officials there say they are exploring all options, which include reducing expenses, seeking new revenue streams, dipping into the general fund balance, and/or raising taxes.
Most finance officers of big cities are “confident” there will be a recession in 2020 or 2021, according to a report by the National League of Cities.
As a general rule, the Government Finance Officers Association recommends local governments keep a reserve of at least 16% of annual general expenses, a “good amount to provide a cushion for the unexpected,” said Shayne Kavanagh, the association’s senior manager of research.
That would mean about $57 million in Delaware County. At the end of 2019, the county expects roughly $55 million in reserves, according to James Hayes, the county’s budget director. By closing a hole in the 2020 budget with $23 million from their reserves, the county will have about $32 million left — below the national benchmark but within county policy, which says the reserve fund balance must be at least $26 million.
On Wednesday, council members debated the financial legacy the outgoing members were leaving, with Republicans touting millions in surpluses over the last few years and Democrats pointing out the drawing down of the reserve fund and large looming expenses. For example, in the coming months the county will review how it compensates employees — one of the biggest expenses for local governments — in an attempt to be more competitive in attracting and retaining the best candidates.
Zidek said the council — with three new faces — “will strongly consider amending this budget,” after the swearing-in next month. He said they will not raise taxes but will focus on spending cuts.
Marianne Grace, the county’s executive director for nearly two decades, expressed some reservations Wednesday about the budget but said the council majority told her and the budget director to deliver a spending plan that did not increase taxes.
“As a manager, I would like to see additional revenue," Grace said. “It’s certainly not a popular opinion or decision. It’s a hard decision for a public official. And I know the public doesn’t want to see it.”
She said county departments have worked to cut costs.
Grace presented a proposed budget to the County Council in early November, as she does each year. But this year, the presentation and announcement of no tax increase fell on Nov. 4, the day before an election in which Democrats had their first real shot at taking the majority.
"Budgeting is inherently political,” Kavanagh of the Government Finance Officers Association said.
Michael A. Pagano, director of the Government Finance Research Center at the University of Illinois at Chicago and coauthor of the National League of Cities’ annual city fiscal conditions report, said he understands the politics at play in Delaware County.
“One of the things you never want to do in office is raise taxes," he said. But the choice "can certainly be used for political purposes as a way of pushing the decision to a subsequent [board] and imposing the costs on a subsequent generation.”
At Wednesday’s meeting, Council Chair John McBlain, a Republican, noted he has voted in the past to raise taxes.
“I’m proud of the record we have of no tax increases,” he said, "when I thought that was the responsible thing to do.”