MEDIA — Last week, Delaware County Council managed to pass a $358 million budget.
It did not include a tax increase.
But it did require $23 million from the fund balance.
Whether that's a good or bad thing depends on how you see it.
The budget is a $358 million spending package, carrying with it the county portion of the real estate tax. That would be 0.54 cents on each $100 of assessed value or $540 for a $100,000 home. It had its first reading earlier this month with a night public hearing. Final passage occurred Wednesday, although Democratic council members pointed out that future councils - such as the all-Democratic one set to take seat in January – can amend the budget at any time.
As with various motions – albeit not all – throughout the past two years, this included a bit of contention throughout the hour-long discussion Wednesday.
"For completing a year in which after cutting taxes a little over $4 million this time last year, we will run a deficit of roughly $9 million in 2019 eating into the fund balance," County Councilman Kevin Madden said, adding that the budget then doubles down on that by allocating $23 million to match expenses. "They propose running a deficit all while knowing full well the extraordinary nature of the challenges their successors are being left to deal with because it wasn't under their watch."
As you can imagine, Republican council members didn't look at it quite the same way. In addition to it being the sixth consecutive year without a tax increase, the outgoing troika of GOP members stressed the unique situation with the reserve.
"Delaware County right now has an historic high in its reserve funds - $65 million," County Council Chairman John McBlain said. "I'm unaware of any other time in the county's history where we've had that sort of historic high."
County Executive Director Marianne Grace encapsulated what council was facing with this year's budget consideration.
"The fact is there is a gap in the budget," she said. "There's a gap between revenue and expense and that has happened over the past several years. Frequently, (it's) filled with the fund balance, which is the money that you're carrying over from the previous year."
Grace added, "as a manager responsible for the day-to-day operations, I would like to see additional revenue. I know that's not popular ... it's a very difficult decision for an elected official. It's not something anyone in the public wants to hear."
The budget sparked nearly an hour of discussion, and two amendments were suggested to alter the package. Democratic Councilman Brian Zidek made one motion to reduce expenses by 2.5 percent across the board.
When asked by McBlain what impact that would have on county operations, Zidek responded, "They would operate with 97.5 percent as much money as they would otherwise have."
As both Democrats and Republicans acknowledged this would not change any collective bargaining agreements in place, Republican Vice Chair Colleen Morrone noted that the costs would have to come elsewhere.
"Have you determined the impact of that on the different departments that would be impacted by the 2.5 percent?" she asked. "It's easy to throw a number out there of 2.5 percent and say, 'Just do this,' but there needs to be some evaluation and review of that."
Zidek got support from one member of the public.
Zurdi Dobi of Tinicum had addressed the councilman earlier in the discussion.
"I don't know why you haven't made any effort to address the corruption tax which you stated during the course of the year," Dobi said, referring to roughly $17 million that Zidek had said could be reduced due to positions and contracts being given to those in political favor. "I'd like to know just exactly what the status of that is."
After the amendment surfaced to cut costs 2.5 percent, Dobi spoke again.
"Mr. Zidek, at least you're attempting to address the issue that you stated last year," he said.
Republican Chairman McBlain also had his say.
"The smart rear end Irishman in me would say, 'Sure, I'm going to go ahead and vote for a 2.5 percent reduction that Mr. Zidek has presented with no analysis, no idea of how it will impact the employees of Delaware County; no idea how it will impact the services that are delivered to the residents; no analysis or comment on how it would affect structured contracts that we already have with unions, with providers, with agencies that we outsource services, where there are already contracts in place," he said. "Smile on the notion – he wasn't going to get me on the last day that we were there. That would be the irresponsible thing to do.
"As politically attractive as it is, I think it is asinine and irresponsible to propose a reduction like that without any analysis," he said, adding he would've been willing to sit through the night hour to go over line item deductions to lower expenses. "But I won't tarnish what I've done here over the last 10 years on somebody's political whim with an irresponsible proposal."
Then Morrone made another motion – to eliminate 21 county positions that have been vacant from as far back as 2008 and as recent as 2014 for a savings of $663,036 and then to allocate $611,410 for a 2.3 percent cost of living increase for those who have retired from Delaware County from 2018 and prior. There were 274 vacant positions in the county, not including these 21.
"We have not given a cost of living increase here in the county since 2005 and I feel that in looking at the numbers, there is a way to make this adjustment that is cost neutral to the budget," she said.
Madden responded, "So basically what we are doing is doubling down on the deficit that we're already proposing passing and we're expanding on that."
To this, retired county employee George Oronzio of Brookhaven spoke of what this would mean to him.
"I would ask members of council and current employees how they would survive with no cost, no raises and no cost of living for 14 consecutive years," he said. "What my pension was 17 years ago is devalued by at least 20 percent and all my expenses have increased by over 20 percent ... Three years in the military and 20 years for the county and I can't afford to pay expenses if I was on my own ... I shouldn't be left destitute after serving 20 years."
He implored them, "think if you didn't get a raise for 14 consecutive years what financial position you would be in," Oronzio said.
Madden said he was deeply sympathetic to Oronzio's situation.
"Why is it that the folks to my right who have been in office for as many as eight years and have presided over no cost-of-living increases for eight years and their predecessors prior – no cost-of-living increases," he said. "This is kicking the can to their successors to deal with the problems they didn't face under their watch."
Madden also listed a $50 million radio system upgrade needed for police and first responders and "an infrastructure that is literally crumbling with costs to the capital plan of over $100 million in the next three years."
McBlain said he wasn't a member of the pension board until 2018 and a cost-of-living increase was being considered.
"As you recall in the fourth quarter of 2018, the stock market took a nosedive so we deferred taking any action at that point," he said.
Morrone added, "it's something that the retirement board considered on a regular basis at least through the term that I was on the retirement board."
She said economic conditions were different when she started her county public role.
"When we came onto this council in 2012, we didn't come onto a council that was in the position that the county's in right now," she said. "We're leaving this county in a really good spot. We came in in the middle of a recession and we came in with two refineries having closed down in Marcus Hook with the stock market at all-time lows. We're not leaving that for the county as we exit in 2019."
Madden said he respectfully disagreed.
"I don't view passing a budget with an historically high deficit to be leaving the county in a great position, especially when we have $150 million in capital expenditures on the plan that's associated with this budget over the next three years," he said.
Zidek's motion for a 2.5 percent across-the-board county expenditure cut failed by a 4-1 vote. Zidek was the only one to vote for the motion. Morrone's motion to amend to include a 2.3 percent cost-of-living increase for the pension of retirees prior to 2018 passed on straight party lines, with McBlain, Morrone and Culp in favor and and Madden and Zidek opposing it.
Zidek said the financial package didn't sit well with him. He and Madden called it "irresponsible".
"It sort of feels to me like we are shooting for a grade of D-plus and then feeling good that we passed the test," he said. "We can and we should do better."
He compared Montgomery County's fund balance of almost $89 million on a $420 million budget to Delaware County's $30 million fund balance on a $350 million budget.
With newly elected Democrats coming to assume their position in a few weeks, Zidek said the budget will be changed.
"Over the next few months and years, the new council will work closely with our budget director's office, the executive director and all of the department heads to start with a blank slate," he said. "We'll examine how every dollar is spent in the county to make sure that no dollar is wasted. Some budget lines will be increased but many will be decreased. It's going to take a lot of work to revise how business is done in Delco ... The hard-working taxpayers of Delaware County deserve a budget that strives for an A-plus and we intend to pursue this goal with the new council."
McBlain referred to the Feb. 8 assessment give by Moody's Investors Services in which they said, "Delaware County has a very strong credit position, and its Aa1 rating slightly exceeds the U.S. counties median of Aa2. Notable credit factors include a healthy financial position, a small debt burden and an affordable pension liability."
He said the county's financial adviser reported that debt service would be steady through 2025, then drop to under $20 million in 2026, resting at $13 million in 2028.
"The options you have are to cut expenses, to raise taxes or to use your cash-on-hand in order to balance the budget," McBlain said. "And, I think it would be irresponsible with $65 million in the bank to do as some people would like to do and have us propose a tax increase so that we can maintain a fat savings account and still generate more taxes from the residents of Delaware County."
In the end, the $358 million budget with the cost-of-living increase for retirees and without the across-the-board 2.5 percent expenditure cut passed along party lines: McBlain, Morrone and Culp voting in favor of the measure and Madden and Zidek opposed.