Sussex County Delaware

State Bill Would Cost
Counties, Towns $17.5M
Delaware Realty Transfer Tax ...

Lavelle Bill Would Cut Their
Share of Transfer Tax

State Representative Greg Lavelle (R-Sharpley) has introduced legislation aimed to bolster state coffers by taking 3/8 of one percent of the realty transfer tax it currently splits with municipalities and counties.

Currently, the state splits the 3 percent realty transfer tax on all property transfers with the county or municipality the property is in.

Under Lavelle's House Bill 157, however, the state would take 1.875 percent, while the share taken by counties and municipalities would be reduced to 1.125 percent.

The realty transfer tax has been an important source of revenue for municipalities and Sussex County, especially in fast-growing coastal Sussex, where towns have used the funds to provide services expected by newcomers from cities and suburbs.

The county and municipalities can use their share of the transfer tax for public safety expenses, infrastructure improvements and debt reduction. The funds may not be used for general fund expenses.

It is estimated that the change would cost counties and municipalities in the state $17.5 million, money which would go to the state instead.

For the state, the legislation would take back approximately 75 percent of the 0.5 percent it originally gave to the counties and municipalities when the revenue sharing plan took effect.

Prior to revenue sharing, the state received 2 percent of the realty transfer tax, with the counties or municipalities receiving 1 percent of the tax.

According to Rep. Lavelle, "Given the state's financial situation, I think this is an important step that the state could take to help alleviate its approximately $300 million budget shortfall. The original 'revenue sharing' plan approved by the legislature several years ago was a way to assist the counties and municipalities with their financial obligations. Now, the state is in need of some assistance, and the counties and municipalities can do their part in lending a hand."

Rep. Lavelle also said, "Some of the counties are running at a surplus, and it is time for them to return some of the tax revenue to the state."

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