Mayor Purzycki Proposes a Fiscal Year 2018 Operating and Water/Sewer Budget During...

Mayor Purzycki Proposes a Fiscal Year 2018 Operating and Water/Sewer Budget During His First State of the City Address

The Mayor warns of a looming fiscal crisis; City Council will hold budget hearings in April; The City must have a balanced budget in place by late May

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Wilmington Mayor Mike Purzycki tonight asked Members of Wilmington City Council to join him in resolving a multiple-year budget deficit crisis that he said will be virtually insurmountable unless the City immediately re-orders its budget priorities and takes steps to control spending. The Mayor’s concerns about the City’s fiscal future were expressed tonight during his first State of the City Address which included his presentation of a proposed Operating Budget and Water/Sewer Budget for Fiscal Year 2018, which begins on July 1.

Read Mayor Purzycki’s FY2018 State of the City Address

Read the FY2018 Proposed Budget Summary

Mayor Purzycki told the Council that in spite of the City’s fiscal problems, we all need to believe in the fundamental soundness of our City and find answers to our problems by working together. Working in partnership, Purzycki said, is our most solemn obligation. He went on to say that while the state of the city is stable, there is an urgent need to re-invest in economic development and infrastructure, to enhance government efficiency, control costs and eliminate projected budget deficits. He also said we must institute new initiatives to control crime, strengthen neighborhoods, increase employment and improve the delivery of city services to our citizens.

Purzycki is the first Chief Executive of the City to propose a multi-year approach to determining the City’s budget needs. The plan he presented tonight, which will produce $3 million in additional revenue in FY 2018, will help the City mitigate its structural deficits over the next four years. The Mayor said his budget proposal eliminated a projected deficit for FY 2018 and FY 2019 and will help the City better manage projected multi-million dollar deficits in FY 2020 and FY 2021. He said if the City takes no action to tackle the deficits, Wilmington would be facing a cumulative budget shortfall of $19.3 million by FY 2021.

To balance the FY 2018 budget and reduce future year deficits, the Mayor is proposing a combination of $2.5 million in budget cuts, including the elimination of 29 vacant positions, and a 7.5% property tax increase.

Mayor Purzycki said shortly after taking office in January that it became clear to him that the City was already $14 million in the hole even before work began on a new budget. Contributing to the problem was:

  • An unbudgeted city employee pay raise granted last year totaling $6.7 million
  • An unanticipated $6.5 million expenditure for the medical care of injured City firefighters because the City has no catastrophic workman’s compensation insurance coverage
  • The loss of $1.4 million from the City’s right-turn-on-red safety camera program because of action by the Delaware General Assembly

The Mayor said other factors affecting the City’s current budget dilemma include:

  • A decrease of $3 million in the City wage tax as projected by the Wilmington Economic and Financial Advisory Council
  • Overtime costs for police and fire which is trending $2 million over budget
  • A projected $1.2 million increase in employee and retiree health care benefits for next year

Purzycki said this type of undisciplined and unregulated spending, coupled with unexpected costs has resulted in a substantial reduction of the City’s Unassigned Fund Balance. The City’s bond rating agencies have warned that if the fund is further depleted it will cause Wilmington’s bond rating to drop.  The bond rating determines the interest rate at which the City can borrow money for the upkeep of water/sewer infrastructure, roads, and parks among other things.

To begin to mitigate the City’s projected deficits for the next four years, the Mayor is proposing a Fiscal Year 2018 operating budget totaling $154.1 million, which is an increase of only $94,000 or 0.1% from FY 2017. To balance the new budget, Mayor Purzycki is proposing a reduction of 29 full time positions for a savings of about $2.5 million, plus additional expenditure reductions. He is also proposing a 7.5% property tax increase. The proposed budget will produce a $3.4 million surplus for FY 2018 which the Mayor said will help begin to ease the City’s budget deficit crisis through FY 2021.

The proposed property tax increase of 7.5%, when applied to a property with an assessed value of $50,000, such as a property in the Union Park Gardens community, would increase the annual property tax by $70 a year, or by $5.83 a month. By comparison, the 7.5% tax increase for a property in the Brandywine Hills community assessed at $100,000 would increase the annual property tax by $140, or $11.67 a month.

The 29 positions proposed to be eliminated are all vacant, so no one will be laid-off, said Mayor Purzycki. These positions include:

  • Two in the Mayor’s Office (Economic Development Researcher and an Administrative Assistant) plus the reduction of other salaries will result in a savings of $272,000.
  • Two in the Law Department (staff attorneys) plus a reduction of other salaries for a savings almost $335,000.
  • One in the Finance Department (Parking Regulation Enforcement Office or PREO) for a savings of $52,375.
  • Two in the Public Works Department (General Laborer and Equipment Operator) for a savings of $127,384.
  • One in the Parks and Recreation Department (Project Manager) for a savings of $103,513.
  • Sixteen in the Fire Department (firefighter positions) for a savings of $1.2 million. Department staffing would be reduced to 156 firefighters without adversely affecting public safety. (In 2012, the City accepted a federal grant which increased firefighter positions by 13, but when the grant ended in 2014 the positions were not eliminated as planned.)
  • Five in the Police Department (patrol officers) for a savings of $454,551. The number of authorized positions would be 314 officers with this reduction. Much like the Fire Department, Police Department staffing increased from 289 officers several years ago after the City accepted consecutive federal grants which, when they expired, did not result in the elimination of the grant-funded positions. This reduction will enable the City to control costs without affecting public safety.

Additional measures that will help reduce spending include:

  • A reduction of $1.28 million in debt service payments for FY 2018 because City Treasurer Velda Jones Potter refinanced outstanding bond debt. There is also an additional savings of $660,000 due to the normal maturing of older bond issues. (The City’s strong bond rating was recently affirmed by the nation’s three top bond rating agencies.)
  • The fees paid by the City to dispose of trash in the Cherry Island Landfill will drop by $475,000 next fiscal year which includes the elimination of trash collection for 92 accounts that had been collected over the past few decades in violation of City Code.
  • The City will save $300,000 by reducing the cost of animal control services based on a funding formula determined by the State’s Office of Animal Welfare, which manages animal control services state-wide.

The Mayor is also proposing an FY 2018 water and sewer budget totaling $71 million, which is a reduction of $2.2 million or 3% from FY 2017.  This budget supports initiatives begun in recent years to achieve financially self-sustaining and environmentally-sound water, sewer, and stormwater utilities. These include an accelerated Combined Sewer Overflow (CSO) mitigation effort, and finished water filtration and supply improvements that exceed EPA standards.

To fund Wilmington’s water and sewer needs, Mayor Purzycki is proposing a 4% increase for water and sewer rates. He said stormwater rates will remain the same as the current fiscal year. The average residential city water customer who uses 4,000 gallons of water per month will see their monthly bill increase by $1.81. This rate increase is supported by the City’s independent Water and Sewer Citizens Advisory Commission (UCAB) which makes recommendations on utility matters to the Administration, and will allow the city to fully fund a 60-day operating reserve while meeting the minimum debt coverage ratio set by UCAB policy.

Mayor Purzycki is also introducing a series of new initiatives which the Administration will launch in the near future. These include:

  • New policing leadership and strategies to target and mitigate violent crime, and place more officers on the street. The Mayor said the goal is stop the loss of life, the disruption of families, the deterioration of neighborhoods where crime is prevalent or could spread, and the deterioration of our City’s image.
  • Targeted neighborhood initiatives to reduce blight and crime, rehabilitate properties to create living spaces for owners and renters, and demolish properties that cannot be salvaged. Our first targeted area to be announced soon will pilot a new approach to restoring neighborhoods by deploying Police, L&I, Public Works, Law and other departments as a coordinated unit to focus on specific problems in neighborhoods and to produce more rapid results.
  • Data-driven analytics throughout all City departments to measure the performance of our programs, services, and people. We will hold our managers accountable and be able to determine future budgeting, service and programming needs in a more systematic and sensible process.
  • A 311 Citywide Call Center for the coordinated receipt of citizen inquires and service requests and the resolution of those issues in a timely fashion. The data collected through the call center will help support the use of data-analytics throughout the government.
  • Refurbishing our City parks including Eden Park, Father Tucker Park and the iconic centerpiece of our City—Rodney Square—which has for decades not being treated with the dignity and care that it should be afforded.
  • Reduce trash and debris on neighborhood streets and along our City’s gateways where thousands of city residents and non-residents travel into and out of Wilmington each day. The Mayor said we are leaving a bad impression by allowing trash strewn streets to go unchecked, as though we don’t care. We do care, and we are going to act so that our gateways become cleaner and more inviting.

Wilmington City Council will review the Mayor’s budget proposals over the next several weeks. A final budget vote is scheduled for May 18.