Some older residents surprised by new property tax rates

Date Published: 
Sept. 8, 2017

When opening their property tax bills this summer, many local residents expected their taxes to increase because of the March public-school referendum. But the Indian River School District’s successful referendum isn’t the only reason that taxes increased.

To help balance a nearly $400 million deficit, the State of Delaware reduced some perks for residents 65 and older. That includes reducing the senior tax credit from $500 to $400.

Well-advertised was IRSD’s intent to raise tax rates to continue basic funding for the schools. It went to referendum twice and passed on its second try.

Less anticipated was the governor and Delaware General Assembly reducing tax cuts for seniors. Sussex County offers several property-tax discounts to elderly, low-income or disabled individuals.

Delaware offers the State Senior Citizen School Property Tax Credit for anyone 65 or older. But the State pays for that, so the counties don’t lose money. When the State needed to balance the budget, those decisions impacted many people, including senior residents.

“Anybody who had the state $500 discount when they passed the budget, it changed to $400, so they’re calling and saying, ‘You’re charging me $100 more than you should be,” said Jan Steele, IRSD director of business.

Although the State’s senior tax-credit change was unrelated to the school districts, Steele has been fielding phone calls from the community all month.

“Out-of-state people who have summer homes here to want to know if they can apply for the credit. They can’t. They have to be a full-time resident,” she said. The others are people who said they just didn’t know about the referendum, so they didn’t know taxes were going up.”

As a finance manager with the IRSD and formerly in the Delmar School District, Steele gets such calls every year, but more now because of the State’s tax-credit change.

The IRSD was also allowed to raise tax rates by a few more net cents because of state law.

Public referendum is the only way to change current-expense and per-head capitation rates.

But school boards have the power to adjust rates every year for tuition (special-programming needs based on the number of special-education students each year); minor capital improvement (which districts must adjust to match state funding); and debt service (which is comparable to a mortgage payment for the school districts).

“We’re not the only district in that boat,” said IRSD spokesperson David Maull. “People think we’re raising their taxes over and above what the referendum was, and we’re not.”

Overall, IRSD property tax rates increased from $2.578 to $3.097 per $100 of assessed value (which in Sussex County is much less than actual appraised real estate value). The following changes were made:

• Current expense (increased by 49 cents, from $1.86 to $2.35, approved by public referendum)

• Debt service (decreased by 2.2 cents, from $0.216 to $0.194)

• Tuition (increased 5 cents, from $0.47 to $0.52)

• Minor capital improvement (increased 0.01 cent, from $0.032 to $0.033).

The capitation rate was unchanged, at $12 per adult.

Property owners can learn more and view their county tax bills online at https://sussexcountyde.gov/property-tax-information or by calling the Sussex County administration office at (302) 855-7871.