Delaware eyes minimum property tax and higher water bills to close budget gap

Delaware residents could soon be facing a double-digit property tax increase even after the city canceled its Independence Day festival and fireworks to close a $2.3 million budget gap. 

Here's what to know

As the Newark council reviews budget choices for 2027, City Manager Tom Coleman has laid out multiple tax scenarios. According to the Newark Post, his preferred approach pairs a 22% rate increase with a homestead exemption that would subtract $50,000 from the taxable assessment of qualifying owner-occupied homes.

Rental units would be excluded from that break, and commercial parcels would continue to pay the full 22% increase. Officials estimate the plan would bring in roughly $1.6 million annually with the typical homeowner owing about $93 more, compared with about $165 more for the average rental property.

Council could instead choose a simpler 16% increase with no homestead exemption. In that case, the average resident's tax bill would rise by $144 in 2027.

Part of the argument centers on New Castle County's latest reassessment, which residents and officials say moved tax pressure off major commercial properties and onto homes. Opposing the exemption, Councilman George Irvine said, "We're shifting a burden and favoring homeowners at the expense of renters," per the Newark Post.

More background

Coleman also wants an 8% water rate hike to cover upgrades at Newark's water treatment plant so it can comply with new federal PFAS regulations, which target the long-lasting chemicals linked to groundwater contamination.

Additionally, city leaders are weighing a $365 minimum property tax, matching Newark's estimate of what it costs to provide trash collection to a single property. The change would be a hard pill to swallow for residents whose bills are now extremely low — or nothing at all.

According to Coleman, 590 properties currently owe no property taxes. "It is also regressive in that the people that it's going to hit... are probably all going to be senior citizens who get the senior tax exemption or a disability exemption," Coleman said, per the Newark Post. "So that is important to keep in mind as well."

Housing-related costs could rise in several ways at once — through higher taxes, higher water bills, or both — as city leaders try to rebalance a system many believe has given commercial property owners an easier ride.

What's being done?

Council is expected to continue debating the full 2027 budget at its Nov. 16 meeting, with additional meetings in December possible if members are unable to agree on a final package.

At the same time, city officials are exploring new revenue sources that could ease pressure on residents in future budgets. Coleman's top priority is persuading state lawmakers to let Newark retain surplus money from automated speed camera tickets. The city's current camera has produced close to $400,000, and officials are already talking about installing another.

Coleman also floated getting permission to tax short-term stays such as Airbnb rentals and pressing the state for more help paying to pave streets and cover rising police service expenses.

He also proposed hiring an economic development manager to help fill more than 20 empty storefronts along Main Street and South Main Street. Coleman said bringing tenants into just two of the larger empty spaces could add about $125,000 annually in utility revenue.

The debate is expected to continue as city officials decide who should shoulder the largest share of Newark's shortfall. 

Mayor Travis McDermott said that the most equitable approach would be to set a minimum tax and then apply a citywide increase, the Newark Post reported: "It's about creating a healthy Newark that incorporates residents, businesses, renters, all of the people that make our community Newark."

Where can I learn more?

Here is some more reading on similar questions about taxes, public spending, and day-to-day quality-of-life rules. 

• In Berkeley, California, officials proposed a tax on large buildings to speed cuts in gas use.

• In Lancaster, Pennsylvania, city leaders moved to install EV chargers in public parks to help lower-income drivers.

• In Baltimore, City Council advanced a gas leaf blower ban after noise and pollution complaints.

• Across many U.S. communities, weak rules leave glass recycling heading to landfills despite simple fixes.

• In Alberta, Canada, critics blasted an $8 million ad campaign as a wasteful use of public money.

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