Bill Would Eliminate Possible Unapproved School Property Tax Hikes

Posted on 04-25-2022

A bill soon to be introduced in the General Assembly would eliminate the potential for school property taxes to be raised statewide, without a referendum.

Early last year, Delaware’s three county governments agreed to reassess the value of all residential and commercial properties within their jurisdictions.  The actions settled a lawsuit against the counties in which the plaintiffs — Delawareans for Educational Opportunity and the Delaware NAACP – had alleged that an outdated model for valuing property shortchanged Delaware students and public schools.

State law requires that property tax assessments be based on actual property values. The counties are charged with inspecting properties and adjusting valuations, but there is no policy establishing how often this expensive and controversial process must be done, making them reluctant to move ahead on their own initiative.  As a result, Sussex County last assessed property values in 1974, New Castle County in 1983, and Kent County in 1987.

Under state law, reassessment is supposed to be done in a revenue-neutral fashion, with the tax rates reset so the same approximate total revenue is generated at the end of the process*.   However, one little-known aspect of the law is that it allows school districts to realize up to a 10% total revenue gain following reassessment.

“The intent of reassessment is to level the playing field and restore equity in property values and the taxes paid by property owners,” said State Rep. Mike Smith (R-Pike Creek Valley), the prime sponsor of a new bill that would eliminate the possibility that reassessment will produce a school revenue bonus.

“I have young children and I support getting schools all the funding required to do everything they need to do,” Rep. Smith said.  “At the same time, we have a referendum process in this state, with schools needing citizen approval to raise taxes.  The loophole in the current reassessment law essentially allows a significant tax hike to be imposed on Delawareans without their knowledge or consent, subverting the referendum process.”

Rep. Smith’s bill would require school districts to collect the same amount of total tax revenue after the reassessment as they did the year before.

In Delaware, the county governments collect property taxes for themselves and the public school districts.  The majority of the revenue raised goes to the schools.  For example, in Sussex County, approximately 10% of the typical residential property tax bill is county taxes, with the remaining 90% paying the local share of operating public schools.

Rep. Smith’s bill is expected to be introduced Thursday, just prior to lawmakers returning to work on May 3 following the legislature’s Easter Break.


*  Individual property owners will experience tax increases or decreases from reassessment, depending on valuation differences and the adjusted tax rates.