Mitchell: Insight into Dover budget from a former city manager

I have been following the city budget and some of the actions approved by City Council. Many of these actions over the past two years created the need for additional revenues in the budget.”

Donna Mitchell is a property owner in Dover and its former city manager.

I am providing city of Dover residents with the below information because I see there are some misunderstandings about the causes of Dover’s rate and fee increases. Hopefully, this transparency will provide you with clarification.

City Council was reluctant to impose a tax increase along with increased sanitation fees, implemented stormwater fees, a basic life support fee (ambulance service), inspection fees and fines, planning/zoning fees and sewer treatment fees (passthrough county treatment fees). I can understand the reluctance, knowing that these rates, coupled with the increases over the past two years for property taxes and other utilities, wouldn’t be well received.

I have been following the city budget and some of the actions approved by City Council. Many of these actions over the past two years created the need for additional revenues in the budget. City Council had no choice but to increase the property tax rate, since members spent the money in their approved actions. In the past three budgets, they have not met their financial policy requirements. I have bulleted items below that have had a major impact on rates and fees.

• City Council amended the charter via a resolution passed in March 2022 that provided for members’ salaries to be set during the budget process each year and for future pay increases to be tied to the percentage of increase budgeted for the nonbargaining employees. The council salary expense budget in fiscal year 2022 was $71,347 for all council members. After the change, in fiscal year ’23, salaries were $178,768; in 2024, $193,500; and in 2025, $200,800. I do believe the council had a committee, or group of some sort, complete a comparison of other governments, but I’m not certain if any of that information was made public.
• In July 2022, City Council directed staff to work on a revised pay plan for all city employees. As stated in my letter to the editor in April 2023, the city manager said the research found that city employees were, on average, compensated 30% below the comparative entities. Since it took so long to complete the revised pay plan, City Council took action to approve it and put it into effect in May 2023, without explanation of how it will be funded.
• City Council approved a budget request for $239,684, per a memorandum of understanding with the Fraternal Order of Police, in July 2022. The adopted action agreed to a change to the FOP’s fiscal year 2024 pay scale in lieu of the police chief not having to retire, since he aged out in 2022 in accordance with the police department’s policy. No funding source for this action was included in the request. In November 2022, council was informed the cost was closer to $1.5 million.
• The city retirees in the general pension plan asked council for a pension adjustment due to inflation, much like was done for council and active employees. In 2018, City Council passed a motion to review a pension adjustment for retirees every three years. However, it was not codified and, therefore, not scheduled at the appropriate time. Those reviews would have occurred in 2021 and 2024. They also requested parity with the Dover police pension plan, with a 2% adjustment every year. The cost of the pension adjustment is $1.1 million in this year’s budget. The annual 2% adjustment is being added to the pension contributions as a percentage of payroll the city contributes each year to all employees.

The result of the above actions added approximately $9.1 million over the past two fiscal years, of which $6 million is salaries and $3.1 million is benefits (i.e., medical and pensions) for active employees. In addition to these prior year increases, the city just completed several contract negotiations with the unions that impact this year and the future years of those contracts.

There is also some misunderstanding regarding the sanitation and stormwater enterprise funds that were established in this year’s budget. These functions were previously included in the general fund budget, as divisions of the Public Works Department. Therefore, they were pulled out of the general fund and put into a self-sustaining enterprise fund, like the other utility funds. Being a separate fund now, they each have their own indirect service costs from support services, budget balance and contingency reserve requirements included in the revenue requirement.

The National Pollutant Discharge Elimination System permit for stormwater runoff management was entered into with the state of Delaware many years ago, so this is not a new mandate by the state. The potential to establish a new utility was studied by a consultant, and a rate model was provided several years ago, based on impervious square footage of every tax parcel in Dover. The city of Newark had implemented a stormwater utility around the time of entering into the agreement with the state. Dover staff replicated much of Newark’s ordinance, which was passed by City Council in June, along with a procedure manual to apply for credit.

Removing the sanitation division from the general fund created a reduction of $3.9 million for sanitation fees at the prior rate and $3.9 million in operating/capital expenditures, compared to the new utility, with a revenue requirement of $4.9 million at the fiscal year 2025 approved rates. The stormwater utility that was implemented reduced the general fund budget for operating/capital expenditures by $2.9 million, with a new revenue requirement of $4.2 million at the FY ’25 approved rates.

The new ambulance contract is $600,000. The city created a new special revenue fund in the amount of $850,000 to include the contract and a reserve of $250,000. The prior contract was included in the general fund budget’s life safety division for approximately $200,000.

All the above actions for the fiscal year 2025 budget were presented to City Council during its workshop in March at the Dover Public Library. In the past few months, the ordinances were drafted and adopted for these changes, effective July 1, 2024, with the exception of the planning/zoning fee changes, which now have been adopted. Rate increases were mitigated last year by using proceeds from the one-time sale of lots in the Garrison Oak business park. This year, City Council had no choice but to make some decisions as to how it was going to cover the above actions and cost increases in contracts, materials and supplies.

I have communicated my concern and opinions directly to City Council and made suggestions that residents be notified, so they are prepared. I do believe that the city has the tools to provide more transparency to the public.

Anyone can follow City Council meetings through the local cable channels or the livestream through the city website, as well as by listening to the audio or reading the published minutes. I would caution that the audio is posted after the meeting decisions, as are the minutes. The minutes do not always include all the discussion and may be abbreviated.

Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.