WILMINGTON — The finance committee of Wilmington Council met Wednesday evening, the night before council’s regular meeting, to discuss options the city’s financial future — and whether that means six-figure cuts or more taxes.
Wilmington Mayor John Stanforth and his executive assistant, Marian Miller, said they would begin working with Deputy Auditor Mary Kay Vance — and, after April 15, City Auditor David Hollingsworth — on crafting a budget for council’s consideration. That budget, Miller said, would show what $1.3 million in budget cuts — about 15 percent of the budget — would look like.
When council passed its 2016 budget late last year, it projected a $1.3 million deficit, with $400,000 left after that deficit. If those projections hold true, the city wouldn’t be able to pass another budget like it for 2017, or, as Stanforth put it, “We’re broke, right David (Hollingsworth)? We’re broke.”
“It’s been coming for five years,” Hollingsworth agreed.
“If you accept that reality, then you don’t move forward with a tax increase,” Miller said, adding that if council doesn’t like that budget, it can move for a tax increase, which would go before voters in November.
Committee chair Mark McKay said while the committee and council were anxious to discuss it, “We want to give you guys the opportunity to tell us what you think you can do.”
Stanforth said council could help by not approving supplemental appropriations.
“I know we’re talking nickels and dimes, but it counts up to money,” Stanforth said. “Unless we are absolutely forced to do it, I wouldn’t do it.”
McKay said the committee will continue to look hard at requests for supplemental appropriations.
While Stanforth’s administration searches for budget cuts, committee member Kelsey Swindler said the committee must also discuss whether to place a tax issue on the November ballot.
“Those two are not mutually exclusive things, unless we can cut all the way to a million dollars, which would be incredible,” Swindler said. While the city should save money where possible, “I think we’re also in a different position this year, and for the last five years, than we’ve been in previously.”
Swindler and McKay said they’re leaning toward an earnings tax, with McKay adding that he favored a 0.5 percent earnings tax. Milburn said she needs to see numbers, including what the difference in revenue would be of a property tax versus an earnings tax.
Currently, the 1 percent earnings tax, enacted in 1992, generates $4.5 million, according to city documents and officials. A 0.5 percent earnings tax should then generate a little more than $2 million.
If a vote were put to citizens, it would have to be filed with the Clinton County Board of Elections by Aug. 15. McKay, Swindler and committee member Randi Milburn said they’d want to solicit residents’ input before the vote.
“This is not totally council’s decision,” McKay said. “I would certainly want input from citizens in some kind of public way.”
McKay and Milburn said the committee needs more information about cuts before they schedule a forum, and Swindler said it’s important to be and look prepared.
Wilmington resident Tyler Williams asked if the ballot itself isn’t the public forum, to which Milburn replied, “We need a little bit more direction,” including whether citizens favor a property tax levy or an earnings tax.
President of Council Randy Riley suggested having such a forum in the Moyer community room and said notice can be given to residents on their utility bills.
Hollingsworth said the committee must discuss more than the $1.3 million projected deficit, because the city would also need money to pursue projects like paving streets. And, Wilmington Treasurer Paul Fear said council hadn’t addressed the city’s decreased revenues for years.
Swindler said the tax shouldn’t be temporary because it suggests the city needs to “fix one incremental, small problem. Our problem is we need more revenue.”
McKay said citizens have told him “it’s time to do this,” but he didn’t know “if that translates into votes.”
“Sounds like we’re going to have something on the ballot, it’s just a question of what,” Milburn said.
Hollingsworth, Fear and Stanforth also cautioned committee members about apparent growth in income tax revenues.
Fear said a state law makes businesses pay those taxes monthly, instead of quarterly, which has made the first two months’ receipts higher than normal. Hollingsworth said refunds go up, too, and need to be subtracted from any growth. Both said council should wait until May to look at them and see how much income has grown.
Riley said PC Connections is making a significant difference in the city’s income tax collections, but Stanforth said, “We’re not going to grow out of this problem. … It ain’t gonna happen.”
The committee also heard a request from Law Director Brett Rudduck, who requested $3,000 each for training, special prosecutors in the event of a conflict of interest, and a temporary employee for when the office’s administrative assistant takes time off.
After the initial $9,000 request, the committee asked Rudduck to return with specific costs for training before they make a decision about that $3,000 as well as the $3,000 for temporary office staff. The committee agreed to suggest to all of council that $1,000 be moved to pay for temporary legal services.
That recommendation will be put before council on March 17.
Reach Nathan Kraatz at 937-382-2574, ext. 2510 or on Twitter @NathanKraatz.