Clarifying confusion on HB 333

May 23, 2014

Recently, there’s been some confusion surrounding a bill I’ve introduced that will clarify the rules towns and municipalities in Delaware must follow to impose taxes in their jurisdictions. I want to clear up any misconceptions about the intent and the practical effect of my proposed legislation.

According to the Delaware Constitution, every municipality in the state exists and is governed by a charter approved by a two-thirds vote of the House and Senate. A municipal charter represents a covenant between the Legislature and the people of a town or city, granting them certain rights and entrusting them with certain responsibilities for their community.

However, a municipal charter does not revoke or transfer the powers held by the state Legislature. Delaware’s constitution grants the providence of levying taxes to the General Assembly. If a municipality wishes to impose a tax, the elected officials of that city or town must ask the Legislature to add a provision granting taxing authority to its charter. For more than a century, this has been the way towns and cities in Delaware have established and expanded their taxing authority - revising their charters from time to time with the consent of the General Assembly.

House Bill 333 does not deprive municipalities of their authority to collect fees to offset their administrative expenses, a point I have discussed at length in recent weeks with municipal leaders from across the state. Out of respect for their position, I agreed during a committee hearing May 14 to strike language from the bill that was related to this point, even though that language would have had no effect on a town’s ability to levy and collect reasonable administrative fees. Any municipal leader who continues to claim that this bill will affect a town’s ability to enact fees and licensing programs is simply not telling the truth.

The Legislature passes legislation and the judiciary interprets legislation. At any point, the Legislature can reaffirm the intent of legislation previously passed. The bill I’ve drafted simply clarifies longstanding statutory practice in response to a recent court ruling that addressed the legality of a municipal business licensing fee.

As amended, House Bill 333 simply reaffirms that a municipality wishing to create or collect a tax must follow the same procedure for revising its charter that we’ve abided by in this state for numerous decades.

Pete Schwartzkopf
Speaker of the House
14th District

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