New Castle County Councilman George Smiley (D-New Castle) introduced an ordinance (No. 10-117) on Nov. 9 that would change the way county government uses revenue projections to build the budget.

The ordinance authorizes New Castle County Council and the County Executive to use 90 percent of the certified real estate transfer tax revenue estimate provided by the New Castle County Finance Advisory Committee as a revenue projection to build the budget for the forthcoming fiscal year.

It comes from a recommendation of a study group New Castle County formed to take a look at county operations, explained Smiley. Based on that task force’s recommendations, the county began using 90 percent of the past year’s real estate transfer tax revenues to build the next year’s budget, he said.

The problem is that, over the past few years, several large real estate transfers have artificially inflated the real estate transfer tax, giving the county a skewed perspective of its projected revenue, Smiley said. For example, New Castle County received $270,000 in real estate transfer tax revenue from Fisker Automotive’s purchase of the GM plant in July.

So Smiley is proposing the county instead use 90 percent of the real estate transfer tax revenue estimate the two-year-old New Castle County Finance Advisory Committee creates each year.

At the end of the day, the ordinance is about fiscal responsibility, Smiley said.

The county has been using last year’s revenue number to build the budget since it is the best figure they have had, he said, but since the advisory committee formed two years ago, the county has the opportunity to use a more accurate figure.

New Castle County has been living beyond its means for a number of years and this ordinance is designed to help the county get back on track, he said.

“I think it gives us, as a county, a fairer evaluation of the revenue we have to work with,” Smiley said. “It gives us a step toward fiscal responsibility.”

New Castle County Councilman Bob Weiner (R-Chatham) said he thinks there is a better solution.

“I recognize the New Castle County Financial Advisory Committee provides a fiscally responsible, independent voice for county government and the taxpayers, but suppose those projections are wrong. . .Perhaps the solution is to rely upon the lower of 90 percent of New Castle County’s projection and the prior year’s actual collection of real estate transfer tax. That’s a more conservative way to estimate,” he said.

Smiley said he is giving the New Castle County Advisory Committee a chance to review the ordinance before council votes on it. If they approve it at their next meeting, he is hoping to put it before a council vote in December, he said.

However, the ordinance will not have an impact until the budget for Fiscal Year 2012, he said.

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