Mayor Purzycki Proposes the Fiscal Year 2023 Operating and Water/Sewer Budget During the Annual State of the City Address
March 18, 2022
Read the Mayor’s State of the City Address here.
View the video of the Mayor’s State of the City Address here [youtube.com].
Read the Fiscal Year 2023 Budget Summary here.
Wilmington Mayor Mike Purzycki tonight presented a proposed $176.9 million operating budget for the Fiscal Year 2023 and an $82.1 million water/sewer/stormwater budget to the City Council as part of his annual State of the City Address. The City’s first post-COVID operating budget, reflecting substantial current and future projected revenue declines due to the pandemic, has increased only 2.4% over the current fiscal year expenditures, which the Mayor says demonstrates remarkable budget discipline. The proposed operating budget is balanced by an infusion of $12 million in funding from the American Rescue Plan Act (ARPA).
To stabilize the City’s finances, not only for this budget year but also to avoid looming budget deficits in future years, the Mayor, while keeping City services and programs at their current levels, is proposing the elimination of a net 14 positions. He is also requesting a 7.5% property tax increase, the first in six years, and a 5% increase in water/sewer rates to fund regular and unanticipated costs associated with operating a water utility.
The Mayor began his address by acknowledging the extraordinary times we are in as a City and country. “As we emerge from the worst pandemic in over a century, we find ourselves in a very different world from the one we occupied just two years ago,” said the Mayor. “Mask wearing is entirely optional. We are returning to our restaurants, bars, and entertainment venues. The offices are emptier. More people now work at home. As a result, our streets and sidewalks are quieter—especially during the lunch hour. People are just now adapting to sitting next to a neighbor and speaking directly to one another instead of on zoom calls. Our government performed well during this challenging period in our history. Of almost 1100 current city employees, over 800 of them showed up to work routinely as if nothing happened. They stared COVID in the face and performed admirably. For that, they will be awarded over three million dollars in premium pay as a gesture of appreciation from their city government and its citizens.”
Mayor Purzycki told Council tonight he has deep concerns about projected budget deficits. “While City finances have generally stabilized, there is an unsettling threat of a continued loss of revenues from a number of sources,” said the Mayor. “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. Red-light safety camera fines are down $1.6 million and real estate tax appeals have resulted in an annual loss of $800,000. From 2019, our interest revenue is down $1.5 million. All told, these revenue lines add up to a loss of $7.8 million. We have found some offsetting sources of revenue and have made budget cuts, but the challenge remains real. Thanks to the outstanding work by my department directors and senior management, led by Chief of Staff Tanny Washington, this year’s operating expenditures represent only a 2.4% increase over the Fiscal Year 2022.
The proposed the Fiscal Year 2023 budget and the Mayoral State of the City Address include:
• a balanced budget that draws money from ARPA to cover a projected $7.8 million deficit due to COVID-related revenue losses from reduced wage tax, head tax, and parking enforcement
• a property tax increase of 7.5%, the first in six years, is projected to produce an additional $3.1 million in revenue. The owner of a median assessed property will pay approximately an additional $52.20 annually or $4.35 more per month under the proposed new tax rate
• a water/sewer rate increase of 5%, which is projected to produce additional revenue of $2.5 million. This rate increase will result in an average $2.82 monthly increase for a City customer using 4,000 gallons of water per month and a $2.61 monthly increase for a county water customer using 4,000 gallons. The rate hike is needed to cover annual costs associated with operating a water utility that serves approximately 39,000 customers in Wilmington and parts of New Castle County
• a citywide net reduction in staffing of 14 positions including four in the Mayor’s Office; seven vacant positions in the Police Department, reducing the WPD authorized strength to 312; and three vacant positions in the Finance Department
• an appropriation of $700,000 to continue to clean more City streets as part of the Wilmington Clean Streets Program, which is part of Wilmington’s Beautiful City Campaign
• the reorganization of the Department of Planning and Development, which will be renamed the Department of Land Use and Planning and will have transferred into it the processes and employees from the Department of Licenses & Inspections (L&I) related to permitting, plan reviews, and land development. The new alignment will ensure a more efficient review and timely response to land development requests
• progress toward settling a decades-long dispute with the New Castle County government over wastewater treatment costs with the Mayor thanking County Executive Matt Meyer for his partnership and cooperation as well as expressing appreciation of the work of the respective government negotiating teams to craft a new wastewater treatment agreement
Other excerpts from Mayor Purzycki’s Fiscal Year 2023 State of the City Address:
The Need to Stabilize City Finances Amid Concerns About Declining Revenue:
“Over the past two years, we have declined to raise needed revenues through tax increases because through a severe pandemic this would have been untenable for any number of reasons. We relied instead on CARES Act and rate stabilization funds to help us offset our losses of revenues. This year, however, we must be more disciplined about our finances. As has been our practice since we took office, we will not just look at the current year budget, but five years ahead, in making our budgetary decisions. While finances have generally stabilized, there is an unsettling threat of a continued loss of revenues from a number of sources. 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. Red-light safety camera fines are down $1.6 million and real estate tax appeals have resulted in an annual loss of $800,000. From 2019, our interest revenue is down $1.5 million. All told, these revenue lines add up to a loss of $7.8 million. We have found some offsetting sources of revenue and have made budget cuts, but the challenge remains real. In order to balance this year’s budget with the revenues we project, we would need only a small transfer from the fund balance, ARPA funds, or a modest tax increase. But a sensible look down the road reveals an untenable deficit in years to come if we are not prudent today. Deferring tough decisions would conceivably result in a $40 million cumulative deficit through FY 2026, and a fund balance bordering on insolvency. So, as I have described to all of the Council in several recent meetings, I am proposing a 7.5% tax increase in this year’s operating budget that will give us a small surplus in this year, but one that can be used in the near future to help balance future budgets. The council must realize that in order not to leave our successors with catastrophic deficits, we have to raise additional sources of revenue. These additional revenues must include a long-overdue increase of all of the City’s permits and license fees. They also will almost certainly include another property tax increase in the near future. As to the use of ARPA funds, we propose using $12 million of these funds to smooth the transition back to pay-as-you-go budgeting. An alternative to tax increases, of course, is to cut spending, which in City government, as with most governments, means layoffs. The tax increase in this budget amounts to replacing lost revenue of about $3 million, or in terms of corresponding personnel cuts, in excess of 30 employees in this year alone. This is in addition to the 14 positions already reduced in this budget, seven of which are unfilled positions from the Police Department.”
Continuing Efforts to Improve Customer Service:
“We made two operational changes in City government that will vastly improve customer service for our taxpayers. Our 311 system is designed to improve customer service and increase employee accountability. Every call and online inquiry is tracked and recorded. We now know the response time of every department in dealing with inquiries and complaints of our most valuable customers—our residents. Each year we can expect approximately 104,000 calls for everything from special pickups and parking ticket appeals, to reporting potholes. Before 311 was operational, the average wait time for a caller was upwards of six minutes. Today it is less than one minute. Excluding public works and L&I calls, which by their very nature take time to resolve, 63% of all other contacts are resolved in one call. It is a highly effective customer service module and is improving each day as we continue to train our users on its functions. In summary, 311 will allow us to identify each and every call to the city and faithfully record our departments’ responses to those calls. The second operational improvement in our government is the renaming of our Planning Department to the Land Use and Planning Department. The revamped Department will combine parts of each of our departments that currently deal with land use approvals and permits. Applying for building permits, for example, currently requires an applicant to deal with Licenses and Inspections, Planning, Public Works, and the Fire Marshall’s Office. These offices are not located together and try as they might, they do not coordinate efficiently. Parts of each of these departments will soon be located on one floor to streamline the process of securing building permits for our development community and to make securing permits for small residential applicants considerably more user friendly.”
Reducing Gun Violence:
“Wilmington, like cities across America, was rocked by high levels of violent crime throughout 2021. This unrelenting violence shook our confidence in our ability to protect our neighborhoods and ensure civic tranquility. But this year, while major cities like New York, Chicago, and Philadelphia all experienced continued high levels of violence, and Baltimore had its deadliest year since the seventies, Wilmington’s violent crime has plummeted during the first three months of this year, proving to be the safest for our citizens since 2015. While I am not in any way declaring victory over City violence, I am encouraged by the current trends and deeply appreciative of our outstanding police department for the great job they do protecting us each and every day. I am further appreciative of the great work done by our Attorney General Kathy Jennings and US Attorney David Weiss, whose cooperation with Chief Tracy on removing guns from our streets has, in my judgment, been one of the keys to this year’s reduction in gun violence. With the cooperation of the Council, we have determined to invest in some of our not-for-profits, understanding that we cannot fund all of them—worthy as they may be. We reserve our funding for those who we collectively believe will contribute most directly to our efforts in improving all our neighborhoods and the lives of our children. Together we have agreed to set aside up to $8 million for violence reduction. We traveled to Newark N.J., together to understand what the city where I grew up was doing that resulted in measurable reductions in crime. We have invited Aqeela Sherrills to visit with us and have contracted with his firm to do a landscape analysis of our social service and public safety infrastructures and to determine how effectively they interact with one another. We look forward to reviewing the information and working on a strategy for Wilmington.”
Investing in Neighborhoods and Our Residents:
“Before anyone knew what ARPA was, I had determined to put $5,000,000 aside from our fund balance to invest in the East Side, one of our most historic and yet one of the most neglected parts of town. With the coming of the American Rescue Plan, together we were able to commit tens of millions of dollars to neighborhood redevelopment, greatly enhancing our investment footprint on the East Side and in other neighborhoods in the City. ARPA gives us the once-in-a-lifetime opportunity to test whether plentiful resources can make a meaningful difference in the overall health of impoverished neighborhoods. As with so many endeavors in life, it is difficult to succeed without the cooperation of partners. We selected the East Side because of the tremendous commitment made by Governor Carney in improving childhood education, starting with the construction of a new $80 million-plus Bancroft School. Howard High remains an iconic City educational anchor. Woodlawn Trustees is committing to rehabilitating 60 of its existing residences and to building 20 more new ones. Habitat for Humanity is committed to building 20 more new homes adding to the projects already completed on Bennet Street on the East Side. Reverend Keeling and Central Baptist CDC are already reliable development partners on the East Side with whom we are already working. It is worth mentioning that the development and construction in our City will be largely performed by minority contractors and Disadvantaged Business Enterprises (DBEs), whose participation we have vigorously solicited and supported. In addition, we have partnered with the Vocational-Technical School District to provide paid training for our young people in the construction trades—a highly compensated gateway to upward mobility.”
Goals and Objectives to Change Our City for the Better:
“The larger context of our budget should always be the goals and objectives we have for our City. We should be asking ourselves why we are here. Well first, we must operate our government efficiently and deliver services promptly and effectively while earning the trust of our citizens. But when we ask ourselves what else can we accomplish together, for me the answer is always the same. I want a Just City that is better than America. I want prosperity to be shared among all our citizens. I want to find the best way to educate our children and I want to strengthen families and neighborhoods. I want to allow our neighbors to live unafraid of the violence that shatters lives. These tasks are easy to talk about and hard to accomplish. Critics are everywhere. Those who make real progress are vanishingly rare. I look at this time as your Mayor as an opportunity to permanently change our City for the better. More than any of you, I am aware of the limits of my allotted time here, not only as mayor but also the limits of my time here on this earth. As such I have no time to waste. I am impatient for progress. I am anxious to see our neighborhoods thrive once again. I am anxious for Wilmington to take its place among the country’s best cities. Together we can do so much. I invite you to join me.”
Wilmington City Council will hold public hearings on the Mayor’s budget proposal during the last week of March and in the month of April. Council is expected to vote on a new budget for Fiscal Year 2023 in late May with the budget taking effect on July 1, 2022.