The College Fix

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Newark, DE looks to university for more money

A Delaware college town is pushing for a per student tax to alleviate its budget woes.

But the proposal remains stalled a month after the resolution passed the Newark City Council.

The resolution asks the state to amend the city charter to allow it to tax the University of Delaware $50 per student on its nearly 24,000 enrollees. It would bring in around $1.2 million. The city’s 2024 projected revenues are around $110 million.

The Feb. 12 resolution has not moved since then – it needs to pass both chambers of the state legislature, get signed by the governor, and pass the city council again.

Representative Cyndie Romer, a Democrat, is interested in the proposal but has yet to introduce legislation as of March 12.

The public university opposes the bill. The media team referred The College Fix to a statement from its government relations director.

“The University of Delaware values our relationship with the City of Newark,” Rhett Ruggerio stated.

The university says it “recognize[s]” the “budget pressures” the city is under, but “we oppose any proposals by City Council that would impair affordability for our students and opportunity for our partners who contribute so much value to our city.”

The university plans to continue “discussions” with the “mayor and city manager.”

It did not directly answer questions from The Fix about if tuition would increase to offset the tax.

“This is not, and does not have to be, a student tax. This can be a bill to the University, that is long overdue,” Councilwoman Dwendolyn Creecy said at the Feb. 12 meeting.

The resolution stated, “more than 42% of real estate within the City of Newark is tax exempt, largely due to the presence of the University of Delaware.”

MORE: Bill would nix $100 million in tax breaks for NYU, Columbia

The university voluntarily pays around $180,000 per year, according to the resolution. The university began paying $120,000 in 1965 and an additional $60,000 for police support in 2021.

A higher education researcher at the Foundation for Research on Equal Opportunity says there are benefits to Newark of having a university in town.

However, the city’s budget problems could be in part due to the tax-free property.

“Universities tend to benefit their communities economically because they and their students spend a lot, supporting local businesses,” Preston Cooper told The Fix via email.

Cooper said the percentage of tax-free property in Newark “does seem high,” and “it’s definitely a concern that universities’ property tax exemption can hollow out municipal budgets in their cities, meaning the quality of public services can suffer.”

Cooper also referred The Fix to a September 2021 TIME article that argued many universities take advantage of local public services and their tax-exempt statuses while “struggling host cities pay the price.”

The Caesar Rodney Institute, a conservative think tank in Delaware, also criticized the legislation.

“Blaming a budget shortfall in 2024 on the university which has been there for decades seems mendacious,” economist Charles Copeland told The Fix via email.

He said colleges provide benefits, too:

Universities contribute millions of dollars to the local community through direct purchasing; through payroll of thousands of employees; and through thousands of students who spend money in the local community and whose parents visit and rent hotel rooms. I don’t think that it should be required to do anymore than provide a top-notch education to its students. The positive economic impact of a university is clear. Every one loves a “college” town because of the vibrancy, restaurants, activities, etc. Housing values are often higher near universities.

Some students opposed the resolution at the February meeting.

“Students are experience those same exact hard times, those same price hikes,” one engineering student said, as reported by WDEL.

“We are not an alternative revenue source.”

Editor’s note: The article has been updated with comments from the Caesar Rodney Institute.

MORE: Michigan ‘free’ community college would burden taxpayers, experts say

IMAGE: University of Delaware

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