(This article first appeared in Broad + Liberty)
Delaware County’s executive director on Tuesday unveiled a new proposed 2025 budget to the county council that includes a 23 percent tax increase, and will leave the county with an alarmingly small “rainy day fund.”
If passed, the tax impact on the average homeowner in the county, with a home assessed at approximately $250,000, would be $15.39 a month, or $184.69 a year. The impact would not just be limited to those who own single-family homes. HOA dues and rents for any kind of housing could very well see increases as landlords and property managers would have new costs that would need to be recouped.
This time last year, the council proposed and later passed a five percent tax increase.
At least four of the five council members (all five being Democrats) signaled their likely support for the overall budget, including the tax increase: Chairwoman Dr. Monica Taylor, Kevin Madden, Elaine Paul Schaefer, and Christine A. Reuther.
Only Vice Chairman Richard Womack expressed reluctance, saying the county needed to form a “budget commission composed of a diverse group of community leaders, faith leaders, union leaders, business leaders and academics,” to study the budget and find proposed savings that might lower any tax increase.”
“I feel that working together, Delaware County can emerge from this crisis even stronger with a financial plan that benefits all residents for years to come,” Womack said. “So I say to you, and I ask council to hold off on increasing taxes, put the commission in place. Let’s see what we can do to help bring in resources where we can make different cuts and strategic cuts. And that’s what I would love to do.”
Although he has not officially announced, Womack is presumably running for re-election next year. Councilmember Kevin Madden will be term-limited out of office, so his seat will be open.
Executive Director Barbara O’Malley gave a 40-minute-plus presentation to the county council, and largely blamed the county’s structural deficit at the hands of inflation, as well as years in which the county experienced no tax increases at all.
O’Malley provided a visual showing inflation increasing 23.5 percent over a ten-year period.
“I’m certain all of our residents and ourselves have felt this acutely and personally we’ve seen that food costs increase at Fair Acres. For example: 38 percent in the last five years, 17 percent just last year. And at George W. Hill they’ve seen an eighteen percent increase in food costs in the last two years. Again, these facilities serve nearly over — combined — over 1,700 people and we have to take care of those individuals. So healthcare costs, food costs, energy costs, they impact the county just as they impact any other resident. Inflation impacts all of us and with inflation we have to adjust our costs and costs will increase.”
In 2022, Broad + Liberty interviewed chairwoman Dr. Monica Taylor. When asked about inflation, Taylor said the council would be taking a wait-and-see approach.
“I think that’s something that we’ll probably have to assess, like, after the first quarter [of 2022]. We found that last year — you know, there’s inflation, if you think about gas costs, but then there’s also been the impact of Covid, where we’re not using as much gas, cause maybe we’re not all going out as much as we had been going out before,” Taylor said. “And so seeing how that balances out after the first quarter, I think, will be important to assess.”
Several council members and O’Malley said inflation was driving salary costs higher.
The county has been raising salaries for some time, and has frequently been chided by the county controller, JoAnne Phillips.
In March, just as Councilwoman Reuther was warning of a “sizable” tax increase, Phillips was sounding the alarm over personnel costs.
“I just wanted to make it clear that the costs that you’re considering today are just the salaries, not any other benefits, and the cost of our benefits that go into our budget,” Phillips said at the time, (video, minute 1:10).
“Two, I wanted to make note that there’s an impact on our pension ultimately, which hasn’t really been determined as we accelerate our salaries. If that’s the case, our salaries have really gone up in the last couple years. We’ve gone from about $167 million after Covid after the prison came online to looking at really, almost $188 million about two years later. So we are incrementally raising this a great deal,” she concluded.
Meanwhile, the fiscal crisis reinvigorated a years-long debate over the county council’s decision to reverse the planned sale of a public utility.
Officials from Aqua Pennsylvania, a private water and sewer company, said county officials should take the opportunity to sell the Delaware County Regional Water Quality Control Authority (DELCORA) to Acqua.
Acqua and Delcora agreed to a sale in which Aqua was supposed to purchase DELCORA for $276.5 million, but that sale has been tied up in legal battles since.
“This is an opportunity for us to get this transaction closed,” said Chris Franklin, chairman and CEO of Aqua. “The county would yield, I would say, at least $125 million because a lot more has been spent at DELCORA since 2019 when we signed the agreement of which — of course we would pay for — so that purchase price would go up. I know this is one-time money, if you think about it that way, but I think we should exhaust all forms of one-time money before we put a permanent long-term, forever tax increase on all the residents in the county.”
A resident of Radnor Township who spoke during public comment was highly critical of the proposed tax increase, and said the budget showed several categories of consistent growth that, he seemed to suggest, could have been reined in.
“A lot of the numbers that we’ve seen, maybe they’re decreasing, maybe they’re increasing a little. I want to provide somewhat of a longer framework for this. Since 2021, the expense for motor vehicles is up eight times. 30 percent [increase] for planning, seven times for park police and constable transport — seven times! 50 percent for public relations, four times for personnel in five years! Two times for the solicitor, about one and three quarters times for central purchasing, two times for general administration.” (Note: Readers should be advised that Broad + Liberty has not verified those calculations.)
Another county resident, Leah Kaufmann, suggested that the county would be foisting a second wave of inflation on residents with the tax increase.
“We the taxpayers are already hurting from inflation. The companies we work for are not paying us an appropriate [pay] increase per inflation,” Kaufmann said. “Some big companies can and won’t due to corporate greed, while other small businesses cannot without passing the increase onto our customers — thus creating a vicious cycle of price increases we the residents shouldn’t have to pay for our county mismanaging the budget. Respectfully, find the money elsewhere.”
The council also spent time discussing the use of the dwindling “fund balance,” which can essentially be thought of as the rainy day fund, or reserve fund.
In 2023, the county spent $37.8 million from the fund balance, and then another $10.7 million in 2024. For the upcoming year, the budget would draw another $12.9 from the fund balance.
O’Malley said this will leave the county with only $16 million left in that reserve. Compared to the overall county budget, the reserve fund would represent only five percent of the county’s annual operating budget.
That ratio is incredibly small when compared to neighboring counties. According to O’Malley, Bucks County keeps a reserve that is about thirteen percent of its annual spending, Chester County twelve percent. Montgomery County is most flush with a reserve that stands at 21 percent of its overall annual budget.
(Source: Slide from O’Malley budget presentation to county council on Tuesday)
“And you can see by comparison some of the levels in our peer counties, we really do want to achieve and get [the fund balance] to ten percent [of the overall budget]. And while I say ‘want,’ it really is a need. It’s appropriate and responsible to have a fund balance that could support any challenges or unexpected things that may happen.”
On the brighter side of the budget, O’Malley said the county nursing home, Fair Acres, should be budget neutral sometime in 2025.
“This means they will be self-sustaining. That is tremendous from where they were just a few years ago where they were relying on several million dollars from the general fund to operate,” O’Malley told the council. The majority of funding for Fair Acres comes from Medicare and Medicaid, she said.
She also seemed optimistic that some new technological purchases combined with new softwares could create long-term cost savings in the county’s purchasing process.
The proposed 23 percent tax increase is lower than a 28 percent increase previously reported by Broad + Liberty. To accommodate the difference, the county added more revenue from “transfers” and from one-time federal monies from the American Rescue Plan, passed in the pandemic.
County Democrats won two seats on the council starting in 2017, with Madden and Brian Zidek, who has since retired from the council. But in 2019, they added Taylor, Reuther, and Schaefer, giving their party full control of the county government for the first time since the Civil War.
Enabling those wins were ambitious promises to create a county health department and to deprivatize the county’s prison, which had been privately managed for not quite three decades.
On Tuesday, they spent significant energy defending those promises, which have since become real.
Both Reuther and Schaffer said the absence of a county-wide health department during the pandemic was an embarrassment.
Reuther said she would make the same decision to deprivatize the George W. Hill Correctional Facility, even though the county has struggled to contain its budget.
“While it’s proven to be expensive in a time of rising salaries, it was never about ‘We’re going to save money by privatizing the prison,’” she said.
Yet the deprivatization was marketed, at least in part, as a cost-saver to the county. As the county considered deprivatization, a consultant told the county’s Jail Oversight Board that the county could save money if it lowered the prison population. Even though the county has lowered the daily average population, the costs have soared well beyond what the county expected.
In 2022, the first year the county managed the prison, the total outlay was $47.3 million. That number stretched to $53.3 then $56.6 million in 2023 and 2024 respectively. According to the latest proposed budget, the prison will cost taxpayers $59.3 million next year.
Legal costs have also been on a steep rise. As Broad + Liberty has reported, the county’s spending on outside, third-party legal help has risen past $4.5 million. In the last year of Republican control, that figure was 10-times less, at about $400,000.
O’Malley said two major, costly cases were behind the county: that of the Crozer health system collapse, and the county’s acquisition of the “Delco Woods,” or, the property formerly known as Don Guanella.
Legal issues still await the council in regards to the prison. The county is facing a number of personnel and union-related lawsuits. Additionally, it faces significant legal challenges from two suicides that happened early in the government takeover, as well as a lawsuit related to the alleged murder of one inmate by another.
Although most of the council members didn’t say the word “Republicans” they frequently blamed years of no revenue increases — essentially a shot at previous Republican-majority councils.
“We have had a decade, more than a decade of disinvestment, in what government does to provide services and this board is in the position where we have to raise the revenue to invest and bring government to the level it needs to be to serve our public,” Schaeffer said.
Yet when the Democrats won complete control of the county, the winners said Republican one-party rule had led to higher taxes.
“The Democrats campaigned on a platform of transparency and change, vowing to bring an end to 150 years of one-party rule in the county, which they said led to mismanagement, sweetheart deals, higher taxes and fewer services than their suburban counterparts,” a report from WHYY noted in 2019.
Republicans said the blame was misplaced, and seemed eager for the next election cycle to get going.
“I must be living in the twilight zone. We’ve had an all Democrat council for four years. They are raising taxes 24 percent, and still pointing fingers at previous Republican administrations going back more than a decade while adding millions of dollars in dubious expenses,” Delaware County Republican Chairman Frank Agovino said. “I’m not sure if it is arrogance or incompetence, but what is clear is that this council no longer represents the working class in Delaware County. They are shining examples of the failures of the kind of one-party rule these people once railed against. Next year is now the most important local election in memory.”
Video of the meeting is available here.
The 2025 budget is on the agenda for a meeting on Wednesday, 6 p.m. to hear more public comment. The council will vote on the budget on Wednesday, Dec. 11.
Update: The original version of this article incorrectly stated that the county used $27.3 million from the fund balance, when the actual number was $37.8 million. The article has been updated to reflect this information.
