In a move that has stirred debate within the community, the Newark City Council is considering imposing a per-student, per-semester tax of up to $50 on the University of Delaware (UD). The council is hoping the move helps to alleviate the city's projected $8 million revenue gap in 2025.
According to a report, UD President Dennis Assanis has attributed the university's financial challenges to inflated employee health-care costs, leading to a hiring freeze and the contemplation of additional budgetary measures. However, local officials argue that the university, being exempt from property taxes, should contribute to the city's rising operational costs.
Opposition to the proposed tax have come from students and administrators who argue that the university already significantly contributes to Newark's economy. They contend that an additional tax would impose a burden on students.
If enacted, the tax is expected to generate an annual revenue of $2 million to $2.4 million. However, the proposal must be passed through the Delaware General Assembly, get the governor's approval, and secure a final vote from the council to become law.
While council members have said that the university can decide whether to pass the tax onto students, concerns arise about where the funds would come from. Possibilities include an increase in student fees or a reduction in university spending. Newark's budget challenges stem from a competitive labor market, prompting cost-of-living raises for city employees, particularly police officers.
The city has implemented measures such as raising utility rates, doubling city parking costs, and deferring infrastructure maintenance to address recent budget gaps. Property taxes, a primary revenue source, have consistently risen since 2020, including a 7.5 percent increase in 2024. However, approximately 42 percent of Newark's property is tax-exempt, with nearly 35 percent belonging to the UD campus. If the city could collect property taxes from UD, it could generate an estimated $5.5 million annually.
