At the Wilmington City Council meeting on January 7, 2016–the first council meeting of the year–City Auditor David Hollingsworth issued a dire warning to the council. If spending and revenue stay the same, the budget deficit for 2016 will be roughly $1.3 million. During 2015, the deficit was $925,000. All told, the city’s General Fund carryover for the end of 2016 could be down to $416,000 from $2.7 million at the end of 2014 (and closer to $8 million just a few years prior). Hollingsworth expressed concern about what the small carryover could do both for the flexibility of spending for the city and the bond rating for the city. He acknowledged that he is not able to make legislative decisions regarding the budget, but that he was counting on council to decide what happens.
And therein lies the problem…
So, what has city council done? After Mr. Hollingsworth’s presentation, Councilperson Mark McKay said that as the Finance committee chair, this was their number one issue on the agenda. One would assume that Finance committee, led by Mr. McKay, would be exploring all options. However, there is no evidence of this happening. In fact, as of the council meeting on February 18th, there had been only one finance committee meeting the entire year. Reports at City Council meetings from the Finance committee have concerned only the transferring of miscellaneous funds, not updates on the progress towards addressing the deficit as one might hope.
The time for action is now
The proverbial can representing the City of Wilmington’s fiscal issues has been kicked for many years, and we are now seeing the point where it can be kicked no more. The City has been able to use its significant carryover from just shy of a decade ago to allow itself to keep taxes the same while working to cut some expenditures. Unfortunately, this has gotten the city to the point where it is today. Only a few council members in recent history have been willing to stand up and say that there is an issue that must be fixed, and this council’s hand has finally been forced.
The lack of discussion on real issues at the last two council meetings has been disappointing and, at times, embarrassing. A likely non-existent lead problem, bridge issues at the cemetery, an extended reading of a social media post, and a long presentation by an outside group have taken up at least half of the previous two council meetings. I believe that council takes this seriously, but this type of inaction at council makes any decision that council makes difficult to defend.
The Possibility of a Tax Levy
So what can council do? It seems like cutting, cutting, and cutting more has not quite worked. It is difficult for a city to make too many more cuts when so much of its money is geared towards necessary services. I am sure there are small cuts that departments can make, but these could certainly hurt some of the basic services. One option that City Council and Mayor Stanforth need to consider is an increase in the city income tax. There may be no other way around it at this point. However, this will be an uphill battle for council. Unfortunately, some have made ill-advised pledges not to raise taxes. This levy will need support from the city to pass. And it needs to happen soon. If council does not bring this to the discussion soon, they run the risk of rushing it to the ballot, which has the effect of leading to a backlash from the public.
This budget issue will be a focus for The Wilmington Bulletin in the coming months. Council must act to be a bellwether in the fight to balance the budget and help ensure Wilmington’s fiscal stability. If they don’t, it is residents of the city that will likely feel the consequences.
4 thoughts on “Wilmington Hampered by Budget Shortfall, Inaction”
You say that: “The lack of discussion on real issues at the last two council meetings has been disappointing and, at times, embarrassing.” Why is this happening? Who makes the agenda for
the meetings? Why hasnt the Finance Committee discussed this?
The agenda is created from items moved from the committees or committee’s chairperson. Some legislation/discussion will originate directly from council/president of council but that is atypical. The agenda is compiled of open action items and presented to council. Council then approves their agenda. I hope this provides some clarity.
In my educated opinion there is a good argument for a two mill property tax levy vs. a .5% increase earnings tax levy.
Based on a sample household that owns a home valued at $100,000 and has a taxable annual income of $60,000.
A .5 % increase in the earnings tax would cost that household $300 per year.
A two mill increase in property tax would cost that household $70 per year.
Which levy is more likely to pass?
A five year earnings tax would generate $10 million of new revenue. This is excess to needs for street repair and could take us back to the bad old days of 2010. We then had an unneeded assistant police chief, an under worked and over paid human resources director and an overpaid and an ineffective code enforcement officer along with other bells and whistles. The pressure on the CVB to share a portion of its $100,000 slush fund would disappear.
The earnings tax would give most senior residents, the major users of city services a free ride on the backs of working families. A household of two working parents with combined minimum wage earnings of $17,000 would pay an additional $85 while their landlord paid 0 on the rental income.
The city treasurer has publicly stated that he favors the earnings tax increase because he is a senior citizen and would get off scott free.
The argument that a large part of the city’s earnings tax payers live outside the city and thus pay for many services that they don’t use so let’s stick it to them. That doesn’t sound like a valid pro growth approach.
The time limited (would require another levy vote) dedicated to street repair only, two mill property tax levy would generate $2.2 million over five years. This is more than enough to bring the streets up to standards and release funds that are currently transferred to the street budget for repair to be used for other essential services and/or add to the carry over.
Paul Hunter, a senior citizen homeowner