Wilmington staff outline $20.3M shortfall, propose tax scenarios to fund living‑wage plan
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Summary
City staff told the council a projected $20.3 million general‑fund gap for FY27—driven by revaluation appeal losses, higher benefits and pension costs—would require tax adjustments ranging from 4¢ to 6.26¢ per $100 valuation to fully fund a proposed living‑wage rollout and CIP projects; staff outlined phased alternatives.
City staff told the Wilmington City Council at a budget retreat that expected revenue shortfalls and rising costs leave a roughly $20.3 million gap for FY27, and presented tax‑rate scenarios to close it.
Becky Hawk, the city manager, said valuation appeals filed with New Hanover County and rising benefit and retirement costs have slowed ‘‘natural revenue growth’’ and driven the shortfall. ‘‘Taking everything into account, the natural growth in tax revenue from real property is expected to only be 0.79% next year,’’ Hawk said, noting 2,548 appeals with about $7.9 billion in appealed valuation and roughly $1.9 billion in lost valuation to date.
Hawk presented an illustrative ‘‘all‑in’’ scenario that would raise the tax rate by about 6.26¢ per $100 valuation to cover the general‑fund gap plus capital needs, and described scaled‑back alternatives (6¢, 5¢ and 4¢) that preserve different levels of the proposed living‑wage implementation and deferred operating and capital needs. ‘‘If we were at 4¢, I think we managed to slide in maybe 40% of that living wage,’’ Hawk said.
The presentation included context for how a penny of tax rate change translates to revenue: staff said each one‑cent change generated about $3.5 million in FY26 and will yield only a modest additional amount in FY27 because of the slowed base growth.
Council members pressed staff on distributional impacts. Mayor Bill Staffo said he was skeptical of the largest scenario: ‘‘I have to tell you right now, I’m not voting for the 6.25,’’ he said, adding concern for residents at or near poverty and for seasonal and nonresident users of city services. Other council members asked for phased options and for models showing which service areas or pay bands would be affected under lower scenarios.
Hawk said staff will return with more detailed phased implementation scenarios, comparative monthly and annual cost impacts for median and lower‑value homes, and follow‑up data from the county on how much valuation represents completed versus in‑progress construction. The city will hold a formal budget presentation in early May and a public hearing May 19; state statute requires adoption by June 30.
The retreat produced no formal votes; staff framed the numbers for council direction and asked for feedback as they prepare the formal budget documents.
