2025-01-14

January 15, 2025

We held a workshop on January 7 in anticipation of an agenda item at the January meeting with regard to the referendum.

The tl;dr is that, with New Castle County finishing up its property reassessment this year (2025), the expected increase in property tax money should remove the need for a referendum in 2025.

What's going on?

So, why is there an overall increase in property tax money for the district?  The reassessment was kind of billed to everyone as revenue-neutral, but the state legislature baked a little gem into the reassessment law: the school board gets a 10% wiggle room every time reassessment happens (see Title 14, Chapter 19, Section 1916).  In principle, this means that every school district in Delaware can raise its taxes by 10% every 5 years, reducing the need to go begging for more money to keep up with inflation every few years.  In practice, this means that we can skip the referendum in 2025 and, instead of begging for money, we could come to the public with some real proposals for change in the coming years instead of always having to hedge our bets and just trying to survive.

As a brief recap on how this whole thing works, the state does not give the school district enough money (or teacher tokens) to do everything we need to do.  So, we have to raise money via property taxes to cover any gaps.

1. Every year, we have to figure out how much money we need to cover our costs.

2. The county sends us the total value of the taxable property in the district.

3. We compute the tax rate that would give us the amount of money that we need given the total value pool.

4. We send that tax rate back to the county.

5. The county taxes those properties.

6. The money makes its way to us toward the end of the year.

When reassessment happens, the total value of the taxable property in the district changes.  It could go up or down, but it'll probably go up (the value of property, in general, goes up over time, and they're not making any more of it).  Because the elected county counselpeople don't want to be within 100 feet of a tax, they don't just recompute our tax rate given the new value (it is trivial to do so and can be done with 6th-grade algebra).  No, they send us a new property value and make us send them the tax rate.  Thus, at the end stage of reassessment, Christina School District has to provide the county with a new tax rate, and the amount of money that it raises cannot be any higher than 110% of its current amount.  So, cool, it'll be exactly 110% of the current amount: a 10% increase.

The county expects to provide us with the final property value in July, and we have to provide them with the tax rate shortly thereafter.

So instead of going out for a referendum and asking for a 10% increase, we'll just exercise our right to do it on our own during this reassessment year.

Why wait?

The county's reassessment process has been... less than ideally rolled out.  The dumped the whole thing on Tyler Technologies (a common contractor/partner in Delaware government), and they pretty much half-assed the whole thing.  They were supposed to go inside every property, take notes, etc., and come up with a proper assessed value, but they ended up just kinda walking around outside, if that.

Tyler Technologies sent out a letter to everyone with the information that they guessed about their homes and told them to write back with corrections.  Some people did, some people didn't.

Then the county sent out the worst possible notices about the new assessed values that only made people more confused and a lot angrier.  A giant word salad of nonsense with a scary new price and no explanation for what was actually going to happen.

They assessed undeveloped common areas (common in neighborhoods and such, maybe with a small park or a bench on it) at millions of dollars, throwing homeowners' associations into chaos as they tried to figure out how to deal with their budgets being completely overrun by property taxes for empty lots.

The county then made handling corrections Tyler Technology's problem, at least for a little while, and then it's going to be the county's problem.  Some people are complaining; some aren't.  Will the county evenly reassess all of the homes in a neighborhood, or just the ones of the people who complained the loudest?  We'll find out.

With all this going on, we think it best that we let the county deal with everything related to reassessment.  We don't want any part of it, and if we go for a referendum in 2025, we're going to caught up in the reassessment drama.  Will people vote down the referendum because they don't believe in it?  Or because they're angry at their increased property value and higher relative taxation?  I suspect that anything related to property taxes will be met with resistance and negativity this year, so if we can skip it, then that's probably the best bet.  Red Clay and Brandywine School Districts both passed their referendums last year, and people are already getting upset with them because of the whole property tax thing.  Best to avoid that problem entirely.

Common questions

Why did my property value change?

The county reassessed your property as part of a rolling 5-year reassessment program.  It's going to happen every 5 years now, but the change should be very small because the interval will be small and regular (as opposed to waiting 40 years like this past time).

Why did my property taxes change?

Your property value changed, so the tax rate had to change, too.  Depending on if your property value went up or down compared to the average, your tax burden will have gone up or down accordingly.

If my house value doubled, does that mean that my property taxes doubled?

No, because if everybody's property value doubled, then the taxe rate would effectively just be cut in half and your tax burden would be about the same.  Again, because some properties went up or down more than the average, those properties will have different changes than the average, but overall, the tax burden of everyone in the district, together, won't be any more than 10% more than it was last year.

Why can't you tell me how much my taxes are going to change?

We don't control the property value, so we can't tell you what your new taxes will look like yet.  We won't have that information from the county until July.  After that, once the reassessment is complete, we can tell you exactly what your tax burden will be.

Isn't Dan Shelton suing the district?  Who's paying for that?

The insurance company is paying for it, not us.  Maybe our premiums will go up next year, but they're going to take the brunt of it, if anything comes of it.

What about the union negotiations?

The unions negotiated with the expectation of a referendum in 2025, after which their compensation could be re-evaluated, once the district knew that it would have enough money to support increases.  The district is expecting a 10% increase in 2025, so we plan to work with the unions in good faith to negotiate fair wage increases, understanding that we won't be ready to commit until the end of 2025 when we know that the money coming in is what we expect it to be.  Please be patient and continue to work with us.

How do we know if we made a bad decision about this?

We have around $14 million in reserve right now, which we need to fund the district in the months when no new money is coming in, and also for emergencies.  The district CFO says that if we have to spend $5 million from the reserves in 2025, then that's not good, but also not terrible.  However, if we spent $10 million of our reserves, then that's when we might start to panic.  For the record, he expects to spend $0 million of the reserves, so it would have to be a pretty big and pretty bad emergency.