Even with a $12 million infusion of federal relief funds to help close revenue shortfalls from the pandemic, Wilmington property owners could face a 7.5% property tax hike along with an increase in water and sewer rates come July.
Mayor Mike Purzycki presented his proposed $176.9 million budget for fiscal year 2023, which begins July 1, to city council on Thursday, warning of future tax increases as revenues continue to decline and Wilmington avoided tax hikes during the height of the pandemic.
Over the past two years, Wilmington has avoided raising taxes because the pandemic made it “untenable,” and instead, relied on CARES Act and rate stabilization funds to offset losses, Purzycki said in a pre-recorded presentation.
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“This year, however, we must be more disciplined about our finances,” he said. “A sensible look down the road reveals an untenable deficit in years to come if we are not prudent today.”
The tax hike would increase the annual bill for a median assessed property to $52.20, or $4.35 per month.
But that’s not all.
Purzycki’s budget also cuts 14 city positions, including four in the mayor’s office; seven vacant positions in the Wilmington Police Department; and three vacant posts in the Finance Department.
The budget includes funding for contractual raises and cost of living increases for non-union employees. Those city employees who worked throughout the pandemic, numbering more than 800, will also receive premium pay, for which $3 million has been set aside.
The mayor said a collective $7.8 million loss in revenue necessitated the property tax increases along with the use of $12 million in the city’s American Rescue Plan Act funds to help prepare Wilmington for future revenue losses.
The budget projects a roughly $10 million surplus with proposed cuts and tax increases, and does not use any fund balance to offset costs for fiscal year 2023.
“While city finances have generally stabilized, there is an unsettling threat of a continued loss of revenues from a number of sources,” Purzycki said. “Working from home threatens our wage tax revenues, resulting in current collections being down $1.5 million and tax refunds increasing by an additional $2.4 million. We have found some offsetting sources of revenue and have made budget cuts, but the challenge remains real.”
Although people are returning to city restaurants, bars and entertainment venues, office space remains empty as the business world shifts to more remote work opportunities.
Purzycki warned that city council must recognize that to avoid “catastrophic deficits” in the future, revenue must be raised, and will include increases in city permits and fees along with property taxes.
Councilman James Spadola, a Republican at-large council member, said the mayor’s budget address was “a stark reminder” that even with a windfall of federal dollars, societal changes that have come out of the pandemic can’t be ignored.
“People working from home is not a phenomenon that is going away,” he said, commending the mayor for looking years into the future.
Purzycki’s $82.1 million water and sewer budget also carries a 5% increase, “to cover costs associated with operating the water utility,” which services 39,000 customers in Wilmington and parts of the county.
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City customers using 4,000 gallons of water per month will see a $2.82 increase each month and county customers using the same amount of water will see a $2.61 increase each month, he said.
Wilmington City Council will host a series of budget hearings throughout April, which could prompt changes for the final budget. City council expects to vote on the budget in May.
Other budget highlights include:
- $8 million for violence prevention, which includes funds to contract a Newark, New Jersey official to do a “landscape analysis of our social service and public safety infrastructures” and determine how effectively they interact.
- “Tens of millions of dollars” from the city’s American Rescue Plan Act funds will go to neighborhood redevelopment.
- $700,000 to continue cleaning more city streets as part of the Wilmington Clean Streets Program.
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