Wilmington City Council has given initial approval to the $145 million budget the city manager’s office developed for the fiscal year ahead–but with an uncertainty.
The city still doesn’t know what’s going to happen with about $1.7 million in revenues it was banking on. It’s money the city won’t be able to collect per the legislature’s recent repeal of the privilege license tax on businesses.
Without that money, the budget is out of balance.
While legislators have said they’ll try to help cities replace that lost revenue some other way, Wilmington is in a tight spot presently as it has to have a balanced spending plan in place by the end of this month. The new fiscal year starts July 1.
Gov. Pat McCrory had explained the repeal followed concern that the tax was inconsisently applied, costly and confusing to businesses.
But City Councilman Kevin O’Grady expressed outrage Tuesday.
“What our state government is doing is taking revenue away from us, and trying to push us towards either cutting back services–which means either cutting policemen and firemen–or adding more to property tax,” he said at a council meeting that night.
The full repeal of the tax doesn’t take effect until July 2015, but Wilmington will miss out on revenues for almost all of the fiscal year ahead per the local billing schedule. That loss is $1.7 million, according to the city’s finance office.
(Click here for a story explaining the billing issue in detail.)
Projections tweaked
On Monday, city council members asked for nearly $300,000 in new spending in the budget, which appeared in the version initially approved Tuesday night, unanimously. A second and final vote is scheduled for June 17.
The added spending: $5,000 to the Arts Council of Wilmington (previously slated for a $20,000 total); another $30,000 to Wilmington Downtown Inc. (previously slated for a $65,000 total); $50,000 for economic development needs; and what amounts to more than $89,000 for beautification in rights of way around the city.
Budget Director Lynn Heim said the city didn’t have to cut anything or pull from savings to accommodate the new spending requests. Instead, her office adjusted its revenue projections.
She said the city anticipates a better collection rate–a “conservative” 92 percent–on the motor vehicle tax, covering most of the new spending requests. A slight adjustment to the ad valorem expectation covers the rest.
Councilwoman Laura Padgett said that method made her “a little nervous,” but Heim said actual collection numbers have improved lately, meaning it’s not just an artificial solution.
Neil Anderson remained uncomfortable with the scenario. He said it was “gut-wrenching” to see so much added to the budget when it already calls for a tax increase. The $91 million general fund would be supported by an extra penny of taxation, creating a 46 cent rate in the city.
Story: Budget writers present plan with increased tax rate, fees
“In my mind, we should better establish our priorities early on and focus on core services before focusing on tangential services or pet projects of folks on council or people that come to council members [with spending requests],” Anderson said. “We add 1 cent [to the] tax rate and [additional spending] yesterday, yet we don’t find it a priority to add detectives, to expand the downtown model for community policing….”
But Mayor Pro Tem Margaret Haynes opined the budget reflects needs and spending the people of Wilmington asked for.
“We all are elected to represent everyone and it’s our responsibility to advocate for the citizens that we represent,” she said.
To explain her position, she pointed to the $30,000 of added money for Wilmington Downtown Inc., which said it needed the funding for a project that the city commissioned.
Related story: WDI to study municipal service district possibility
“I advocated for that [funding]; other people advocated for other things,” said Haynes. “I believe that’s our responsibility.”
She expressed thanks to the budget writing team for formulating what she described as a a tight but thorough plan.
Click here to view the draft.
Ben Brown is a news reporter at Port City Daily. Reach him at [email protected] or (910) 772-6335. On Twitter: @benbrownmedia
