Wilmington Mayor proposes tax increase
On Thursday night Mayor Mike Purzycki, D-Wilmington, proposed a $154.1 million budget for fiscal year 2018, which includes several budget cuts and new revenue sources to create a $3.4 million surplus and address a looming deficit over the next four years.
The budget for the year beginning July 1 is a $94,000, or 0.1 percent, increase from the previous fiscal year.
“Our approach to a responsible budget distributes the burden of eliminating these deficits among our fund balances, through government efficiencies, by imposing a modest increase in the property tax, through strategies to collect new revenues and among our employees,” Purzycki said.
His office said he’s the first mayor in Wilmington history to propose a multi-year budget. Purzycki said he believes taking steps to address the city’s future will address a budget deficit crisis today and down the road.
He said he believes if the budget is approved by City Council he can eliminate the projected deficit in fiscal years 2018 and 2019, and ensure fiscal years 2020 and 2021 are more manageable—if not, he said Wilmington could face a $19.3 million deficit by 2021.
To address the deficit Purzycki proposes $2.5 million in spending cuts, which includes eliminating 29 job positions currently vacant—including in the police and fire departments—and creating additional revenue by increasing the property tax 7.5 percent.
Purzycki said Wilmington already is in a $14 million financial hole.
He said contributing factors include rising medical costs of $1.2 million in the next fiscal year—calling the city’s healthcare plan “too generous” and “too expensive,” noting it could be more manageable if fiscal year 2016’s plan was reinstated—, overtime for police and fire, which is about $2 million over budget in the current fiscal year, and a decrease of $3 million in the city wage tax this fiscal year.
In addition, the Mayor said there are many other setbacks from the previous administration that put the city in a financial hole.
Former Mayor Dennis Williams and Council gave city employees raises totaling $6.7 million, which they drew from the city’s unassigned fund, which is like the city’s reserves. Purzycki said this was done to avoid raising taxes by 15 percent. However, he said if the city continues to use this fund, its bond rating will continue to drop.
Wilmington also will lose $1.4 million on red light violations from its camera program. At the end of June, the General Assembly put a restriction on the camera program, requiring the City to follow criteria determined by the Department of Transportation. However, the city did not abide by those criteria.
Now, Purzycki’s administration must issue refunds for any citation issued after that law was written. He said he wants to work to make Wilmington more independent, without the State having so much control over what the city can and cannot do. City Council President Hanifa Shabazz said she agrees.
“It’s those kind of things that severely effect the fiscal condition of the city, and that’s why we have to have the ability to govern ourselves,” she said.
The city also had a $6.5 million expenditure for the medical care of three injured firefighters, because the city has no catastrophic workman’s compensation insurance. Now Purzycki said he wants to work to ensure insurance is available.
To save money, Purzycki proposes eliminating 29 already vacant positions, including two in the mayor’s office, two in the law department, one in the finance department, two in public works, one in parks and recreation, 16 in the fire department and five in the police department.
The reduction of the fire vacancies saves $1.2 million, Purzycki said. However, he also adds that he plans to authorize a fire academy in the final budget.
Timothy Taggart, vice president of Wilmington Fire Local 5090, said he was disappointed by the decision.
“I don’t think he’s actually listening to what those vital cogs that got him elected are doing,” he said. “It’s kind of disheartening when you see one cut here, one cut there, two cuts here, 16 firefighters. That’s not fair in my book.”
Pending a new agreement with the union regarding a deployment plan, the city will continue the use of a rolling bypass, as has been the practice for several years.
The practice allows the fire department to shut down an engine to save overtime costs. However, it’s a practice many fire fighters have criticized, saying it creates longer response times and puts firefighters’ and citizens’ lives in danger.
Taggart also said he hopes the rolling bypass will be rescinded.
“The citizens pay for six engines, two ladders, to be protecting them at all times and that’s what they deserve,” he said. “We fight fires knowing we have six engines and two ladders. Unfortunately, during the rolling bypass period we lost three firefighters. So we know it’s a dangerous practice and we don’t want it to be continued.”
Purzycki also said he believes there’s too much waste in work schedules in several departments, and that making a more efficient work schedule would save costs. Fire fighters currently work 84 24-hour shifts a year, working every 4th day of the week. Taggart said the Mayor’s Office shouldn’t discuss shifts when it’s a contractual item.
The city also will bring in additional revenue due to a drop in the debt service, which is down $1.28 billion because the City Treasurer refinanced outstanding bonds, and older bonds matured.
The Cherry Island Landfill, which previously only collected trash, has agreed to collect trash and recycling, saving the city money. In addition, the city will stop paying for trash pickup from 92 entities that were using trash services in violation of city code, which requires them to hire outside trash services.
The Mayor also proposed a 7.5 percent property tax increase, which works out to $70 a year or $5.83 a month for property with an assessed value of $50,000, and $140 a year or $11.67 a month for a property assessed at $100,000. Purzycki said without the increase in property tax the consequences in later years could be “devastating.”
“Our property tax is more than double the county rate, creating a competitive disadvantage to us—a disadvantage we can ill afford to worsen,” he said. “While the reasons for the disparities are defensible, the reality is inescapable. When we opt to raise taxes, we must be mindful that there are practical limitations.”
Purzycki also proposes a 4 percent increase in water and sewer rates, with a monthly bill increase of $1.81, as advised by the citizen’s advisory board.
“I think the Mayor gave City Council and the residents and business owners of our city a real reality slap. And it’s going to be a hard reality we have to face,” said Loretta Walsh, President Pro Tempore and Council Member At-Large, about the Mayor’s budget proposal.
“But if we have a mayor willing to face it I think we all need to reexamine ourselves and do it as a right thing.”
Shabazz said she believes his budget is thorough, and agrees with his decision to take a multi-year approach. She also said she believes his tax increases are affordable.
“I knew if we did not do some increases in the previous administration that we were going to be here this time,” Shabazz said. “I’m surprised it wasn’t a double digit. I’m glad to hear that for our citizens’ sake.”
During his address, the Mayor also announced several initiatives he wants to launch in the near future, including the hiring of a new police chief and developing new policing strategies, neighborhood initiatives such as property rehabilitation projects, taking advantage of data-driven analytics in city departments, creating a 311 Citywide Call Center, refurbishing parks and reducing trash and debris from the streets.
“Remember that this is a fairly lean budget with no room for salary increases, new programs, new community centers and economic development incentives. If we are to thrive we must invest,” Purzycki said.
“I am committed to seeing that Rodney Square will once again be the crown jewel of our city. To accomplish these goals we must continue to find ways to generate investment dollars. We must aggressively explore new revenue sources to enhance the city’s financial condition. Our city will never flourish if its leaders are timid. We must be bold.”
Shabazz said she also was pleased the Mayor made a commitment to investing in communities and residents.
“I was glad to hear that the investment in the city was investing in the neighborhoods, investing in our community centers for our children and investing in youth positive development programs as recommended by the CDC,” she said. “I think the community should feel good about what his focus is, and all of it will come to light when we hear all those hearings and details.”
City Council will hold hearings in April, and a final budget is expected to be released by May 18.
Samuel L. Guy, Esq., Council Member at Large, said he’s remaining open minded about the budget and said it’s too early to nitpick at any particular issue. He said creating a balanced budget requires time and thought.
“It’s really a package. It’s like you’re juggling 20 balls, but you really can’t juggle 20. It’s like which 17 are you going to be able to juggle? There are a lot of things of interest, but you have to look at it as a package,” Guy said. “There’s the Wilmington city issue of how are we going to help the people? That’s like the game Operation. Then there’s the other part of Wilmington called Monopoly. So those two games are going on. We’ve got people hurting and economic development going on. So the question is how do we have economic development and also help the plight of the people of Wilmington?”
During his speech, Purzycki also talked of Wilmington’s struggles, such as DuPont leaving the city, increased violence and the death of the three firefighters last year.
He also talked of the city’s successes, including a strengthened relationship with the State and County, its economic development opportunities, cultural centers and parks. Still, Purzycki said more work has yet to be achieved.
“While the state of our city is stable, there is an urgent need to work together over the next few years to reinvest in economic development and our infrastructure, to enhance government efficiency, to control costs, and to find new revenue sources,” he said. “We must begin new initiatives to control crime, strengthen neighborhoods, increase employment and improve the delivery of city services to our citizens.”
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