Monday, July 22, 2024

Wilmington proposed budget: 7% property tax increase, motor vehicle tax hike

City is looking to increase the property tax rate and some fees in the next fiscal year budget. (Port City Daily/File)


WILMINGTON — Residents in Wilmington city limits could pay 2.75 cents more in property taxes per the city manager’s recommended budget. Presented Tuesday to council, it also includes an increased motor vehicle tax and other fee adjustments.

READ MORE: Carolina Beach looking at 9% property tax increase, council cites inflation

Laura Mortell, City of Wilmington’s budget director, laid out the plans to council members. The current tax rate is 39.5 cents but may bump up to 42.25 cents if council signs off on proposed changes in mid-June. It’s the first time property taxes have increased in Wilmington in two years.

To put it into perspective, a family with a home worth of $273,800 will pay $75 more annually — roughly $6 a month.

“The recommended property tax adjustment is driven by the growth and non discretionary costs that the city must fund, as well as substantial demands for improved services and capital infrastructure,” Mortell said.

Since November, city staff and council have met multiple times to assess finances, expectations, and plan alignment of its goals for next fiscal year. Staff also gathered departmental data to put forth the new budget, totaling $298.6 million. 

The budget decreased by 15% from 2023-2024, Mortell divulged. The Skyline Center — City of Wilmington’s new headquarters in the former Thermo-Fisher building — makes up the bulk of the decline. The city purchased the 12-story building for $68 million, with $8.5 million coming from its general fund, which no longer is on the books next fiscal year. 

The city financed the remainder of its purchase with low-obligation bonds and is selling off other properties to pay down debt (it approved $1.28 million Tuesday from sales of 320 N. Front St. and 1502 Wellington Ave. to go toward the payoff).

More than half of the almost 7% property-tax rate increase will go toward capital improvements (1.50 cents) and the rest to the general fund (1.25 cents). The general fund is covered 50% by property taxes, 30% by sales taxes and the rest by intergovernmental revenue (ABC funds), permits, fines and fees.

Impacting revenue are slow-growing sales taxes, Mortell said, which heightened during the pandemic but are leveling out to pre-Covid-19 stats. Last year, sales taxes were originally forecast to be 8% of revenue, but are expected to clock in at 3.1% instead. The decline came after the 2023-2024 budget was adopted.

“Due to this, the recommended forecast for 2025 is flat,” she said, noting it will remain budgeted for $45 million, same as last year.

However, these taxes are also susceptible to market conditions and natural disasters, such as hurricanes, adjustments are made in the budget as needed. 

Though the region has grown substantially in the last few years, the city cites inflation as problematic to keep apace. “For instance, a pick-up truck purchased for the City’s fleet in 2023 cost $48,461, compared to $34,323 in 2022,” according to the budget draft.

The budget aligns with the city’s new five-year strategic plan, 2025-2030, which has prioritized neighborhoods, safety and transportation.

Fees

The motor vehicle tax is escalating in the 2024-2025 budget; it proposes a $10 hike over two years, bringing the fee from $5 to $15. The $900,000 generated from it will be used to revitalize the Neighborhood Traffic Calming Program, suspended since 2008. This will help curb incidents that Mortell said have been on the rise between 2019 and 2023. 

State statute allows cities to charge up to $30 for motor vehicle taxes to be used to fund transportation needs. According to city spokesperson Jerod Patterson, council was presented with other benchmark cities that have levied the tax. For example, New Bern still levels $5, while larger cities like Raleigh and Asheville levy the full amount. 

“Wilmington was one of just three that levied the minimum $5,” he said. “Moving this up to $15 is still below the average benchmark, but provides enough revenue to restart this program. The revenue received from this fee has to go toward transportation, so this is an ideal revenue source to bring back the neighborhood traffic program. It also will allow the city to give more focused attention to address pedestrian-bike-vehicle crashes.”

Citywide there have been almost 400 incidents in the four-year span, 84 taking place on collector streets and 294 on local streets, as motorists cut through neighborhoods when major thoroughfares are congested. 

To improve the safety of walking and cycling, the city is seeking a transportation project engineer and a transportation senior planner. Their job is to strengthen interactions among bicycle commuters, pedestrians and motorists, such as with traffic-calming devices (speed humps, narrow lanes, for instance), as well as look for transportation grants. This also won’t further burden law enforcement, facing lack of personnel.

Other enterprise services — which essentially pay for themselves — include stormwater, balanced at $14.3 million (7% more from last year), and the municipal golf course at $3.6 million, increased by 6%. Each have proposed rate increases, as well as parking:

• Stormwater’s equivalent residential unit fee: 1% increase from $8.60 per month to $8.68 

• Municipal Golf Course: Additional $2 for 18-hole green fees

• Parking: Year three of a multi-year plan to increase on-street parking meters by $0.50

The city-owned decks and lots also will increase pricing, by $1 or $2. Most increases start at the two-hour mark; for instance, the price escalates from $3 to $4 for three-hour parking in a deck or from $12 to $14 for the daily maximum or upon losing a ticket. 

Funding for parking has gone up by 31% due to more surface lots — the Coast Guard and former Salvation Army locations, for example — and the Skyline Center purchase, according to the budget. However, parking is balanced with $11 million.

Capital needs

A new approach has been put forth to take on capital improvement projects to align with the city’s 2025-2030 strategic plan. This year around $32 million is budgeted in various departments — Streets and Sidewalks, Parks and Recreation, Public Facilities, Public Improvements, Stormwater, Parking, and Golf.

The multi-year CIP plan was paused in FY24 so staff could devise a specific funding source. Before, all projects competed for limited money, Motrell said, which resulted in some being sidelined to keep the budget balanced. Yet, cost estimates would continuously increase if not tackled.

Mortell suggested dedicating 1 cent of the property tax rate to capital maintenance projects with a 20-year-or-less lifeline. A half cent of the property tax will go to infrastructure projects under the same model.

“This funding allows for financial growth in future years, and true infrastructure projects will be strategically prioritized based on the health and safety of the community,” Mortell said. 

The 1 cent rate is being utilized for maintenance in the public improvements fund, budgeted at $2.5 million in 2024-2025. It will cover the Riverwalk, park facilities and buildings, trail repair and preservation, and more.

Any capital project 20 years or older will require the city to finance 80% of it and the other 20% will be handled via cash.

Stormwater has more than $11.5 million in projects to maintain drainage systems and capacity of watercourses and containment structures across the city. This includes Brookshire and Beasley roads and the Wisteria and Clear Brook area.

Parks and recreation facilities throughout the city have $865,932 earmarked for maintenance on tennis courts, basketball courts, and fencing, while the streets and sidewalks fund includes thoroughfares, trails, walkways, street upkeep and restoration, plus sidewalk construction and repair. It’s allocated almost $15 million.

The public facilities fund, which oversees improvements to building assets, has just more than $650,000 and golf upkeep at the muni course is budgeted for $1.5 million.

Parking has the least expenses at $50,000 to replace cameras in parking decks. 

There are also more than $173 million in unfunded capital improvement needs over the next five years. The city will cover it as funding opportunities arise, whether it’s freeing up debt capacity, utilizing bonds and grants, or undergoing partnerships and collaborations. 

Employees

The city has budgeted for 11 new positions across multiple departments next fiscal year.

More than a million dollars has been allocated toward core services, including hiring two finance positions, a buyer and accountant, which haven’t received full-time equivalents in years, Mortell said.

“These positions will provide much needed capacity, streamlining, software maintenance,” she said. 

The budget notes the positions have become necessary with city growth leading to a rise in operational requirements and expenses. Workflow bottlenecks and backlogs have also strained current staff.

An engineering associate would help handle double the amount of right-of-way permits being submitted in the last decade. It’s around 1,200 a year, overseen by one person currently. The new addition will help enforce issued permits, review traditional permits and fiber optic network construction plans.

Public works is also asking for a project manager, parks and recreation need a specialist, while the MPO has a marketing coordinator and grants coordinator. Stormwater services is also adding a new project manager to assist the city’s engineering staff with stormwater-related projects.

City staff want to improve compensation after an internal analysis determined some positions were not in line with market rates. Police and fire are getting a boost, with all ranks seeing a 3% market rate adjustment and 2% merit-based one. It will be the same for non-exempt positions, while exempt workers will receive a 2% market-rate adjustment and 3% merit-based one.

The city manager’s administrative office faces a 104% increase in the budget, the lion’s share coming from its repair and maintenance division. The division oversees and maintains the Skyline Center and is allocated $3.8 million in the budget; of that, $3 million goes to operational measures, the rest to salaries and benefits. 

Employee parking also has increased by $82,800, to account for the Skyline Center.

Nonprofits, affordable housing 

A 3% increase in budget funds will benefit nonprofits that do work aligning with public service needs. 

Mortell called the application process competitive for organizations to receive two years of funding. The budget has more than $700,000 going to nonprofits like Coastal Horizons ($48,000), Communities in Schools of Cape Fear ($47,000) and Brigade Boys & Girls Club ($45,000).

Arts organizations and other economic development agencies receive financial support from the city, in more than $2 million in funds. The arts council is slated for $25,000 and Cucalorus at $22,000. The food bank is marked for $50,000, while $65,000 will go to the Continuum of Care 10-year plan — an organization committed to work toward ending homelessness. 

The city has budgeted $70,000 for its fireworks display during July 4; the money goes toward the event setup at Riverfront Park as part of its contract with Live Nation. As well, $90,000 is added in for more Christmas lights to be strung along the Riverwalk.

Mortell told council Tuesday a 1 cent value equals $2.3 million, which is about roughly the same amount going to affordable housing next fiscal year. The money will add a housing rehabilitation technician, whose goal is to “streamline the accuracy of housing rehabilitation cost estimates.” The position will work in tandem with code enforcement to identify financial help, such as from Community Development Block Grant programs.

Council member Luke Waddell said the 1-cent appropriation has been in effect since fiscal year 2023. “I would just ask if we could have a year-over-year breakdown, if we have actually spent that one cent in its entirety,” he requested.

Waddell was the only person at the city council meeting who posed questions so staff could begin researching before coming back with answers later this month.

He also inquired about the Safelight program, which has an 11% increase, at a $222,000 deficit previously. Waddell wanted to know the cost to the taxpayer. Wilmington is the last municipality in the state that continues the program; Raleigh dropped it earlier this year. It was revealed last year that the city actually loses money on it, though law enforcement touts its benefit and asks for its continuation, as it brings down traffic incidents.

Waddell wanted to ensure the fire department was allocated money for mental health training, questioned the additional engineering associate position for fiber optic network — touting the need as “short-term”” — and asked to clarify a few numbers in the police department budget.

“The office of the chief is looking at a 33% increase,” he said, “but uniform patrol is negative 4%. So I wonder if we can discuss what positions are getting filled.”

Also, the police department budget includes the renewal of its in-car camera contract and ballistic IQ technology to help with forensic intelligence on gun crimes.

The city council will have a public hearing on the budget on May 21, with a council work session scheduled for May 31. A first and second reading are scheduled for June 4 and 18 respectively, with the vote sometime in June. The budget goes into effect July 1. 


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Shea Carver
Shea Carver
Shea Carver is the editor in chief at Port City Daily. A UNCW alumna, Shea worked in the print media business in Wilmington for 22 years before joining the PCD team in October 2020. She specializes in arts coverage — music, film, literature, theatre — the dining scene, and can often be tapped on where to go, what to do and who to see in Wilmington. When she isn’t hanging with her pup, Shadow Wolf, tending the garden or spinning vinyl, she’s attending concerts and live theater.

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