A bill that would enable Newark to impose a $50 per-student, per-semester tax on the University of Delaware (UD) is approved by the General Assembly.
Early last year, the Newark City Council overwhelmingly decided to collect the tax; but, the city needs state legislative approval to modify its charter.
The only thing left to do to make that charter amendment official is for Governor Matt Meyer to approve it after it passed the State Senate on Thursday.
The tax, which is anticipated to generate more than $2 million for Newark given the city’s $6 million budget deficit, will be formally enacted by the city council if it is signed.
According to City Manager Tom Coleman’s testimony, the university has been exempt from taxes since 1915, which exempts it from the two main methods of tax collection: property taxes and real estate transfer taxes.
Furthermore, university-owned property accounts for 37% of the city’s tax-exempt properties, which make up 42% of all properties.
Coleman claims that taxing UD assets would generate around $5.8 million for the city, nearly making up the difference in funding. Property taxes in Newark currently generate about $9.75 million a year.
“Residents of Newark are increasingly frustrated by the financial burden they are carrying — property taxes increased 5% in 2022 and 7.5% in 2023. Water and sewer fees have also risen repeatedly in the town,” the bill’s sponsor President Pro Tempore Dave Sokola (D-Newark) stated.
The University of Delaware started giving the city $120,000 in lieu of taxes in 1965, and in 2001 it added an additional $60,000 each year to help with public safety initiatives. Since then, neither of these contributions has risen.
“This legislation is about equity, sustainability and accountability, and Newark City Council sees this measure as critical to its financial health,” President Sokola stated.
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Despite not being a prerequisite of the legislation, some UD students have opposed the tax throughout its passage in the legislature because they believe it will be passed down to the students as a fee.
“The University of Delaware and the City of Newark have a shared interest in the city’s betterment, financial viability and overall strength. We are understanding of and sympathetic to the city’s needs, which — in many ways — reflect ours, due to inflation-induced costs and other financial pressures,” the University of Delaware stated. “Legislative partners here in Newark and throughout the state have long recognized the University of Delaware’s profound economic impact on the state, exceeding $3.2 billion in total annual output. We prepare students, including thousands of Delawareans, for success in their professions, communities and beyond. Our goal is and remains centered on providing an accessible and affordable pathway to a UD education for our students — those who contribute social, cultural and economic value to the City of Newark.”
Members in both chambers unanimously approved the bill.
