Ben Schachtman: So, Kelly. You recently watched the city’s budget meeting, a four hour review of various components of the municipal budget. How was it?
Kelly Kenoyer: It was riveting, Ben. There are a lot of changes coming up.
Ben: Riveting?
Kelly: Okay, yea, it wasn’t all excitement - but there were a lot of important conversations. There is this pervasive sense that the city is a little bit broke right now, and needs to be super careful with its spending.
Ben: Okay, that actually is pretty interesting. Why is that?
Kelly: so, what we heard from staff is that inflation is really stressing the city’s finances. Here’s Budget Director Laura Mortell:
Laura Mortell: "Currently we are confronting with unusual inflation, with limited revenue, labor market pressures and unpredictable, unpredictable nature of state and federal policies, all of these impact the city’s financial prospects."
Kelly: But I think their belt is also extra tight because of the $68 million purchase of the Skyline Center. When city council raised taxes last year, some council members claimed that played a role, while others blamed other factors – but the public was definitely upset, so they’re kind of stuck in a bind now and want to avoid another tax hike. The city wants to sell off surplus properties to offset the cost of the skyline center, but it’s a heavy lift.
Ben: Right, they’ve made some progress, and the city’s actually lobbying for legislation that would help them privately negotiate deals to move the process along. But it’s still not moving fast enough to balance out buying the tallest building in Wilmington.
Kelly: It’s not. And the city’s other efforts, while helpful, are incremental. For instance, here’s Mortell talking about using parking fees to pay down some of that debt.
Laura Mortell: So FY 26, they're suggesting a $500,000 payment to debt service to pay off some of the skyline parking deck. And that is amounting to a very small fraction of amount. That is about $100,000 but we'd like to shift that also to the general fund.
Ben: That is certainly a tiny fraction of $68 million, but I can also certainly see why inflation and other economic factors would make it harder to balance the budget.
Kelly: Really it’s that promise not to raise taxes because of Skyline Center. I think residents would likely feel like that was the cause of any tax increase, even if inflation and rising health costs are genuinely a major factor. But all that is why city manager Tony Caudle is asking departments to make cuts - he requested $3 million in cuts, and they got proposals near that amount. Although he said not all of them are viable, it sounds like they’ll bring it to council at the next budget meeting.
Ben: What were some of the other cuts?
Kelly: Well, a few years ago they allocated $3.5 million dollars for rail realignment.
Ben: Right, this is a long-running proposal to move freight rail traffic to the Brunswick County side of the river. It’s a huge, like billion-plus-dollar idea, and it hasn’t made a ton of progress.
Kelly: Right, so they’re taking that funding back now, since it’s not a top priority. Caudle said it’s because of the “juxtaposition with the cape fear memorial bridge replacement.” But I’m sure that money is pretty helpful to them right now, too.
Ben: What about affordable housing? I know that’s been a big topic for you.
Kelly: Right, so because this year’s revaluation made most properties more valuable, the city has to restructure how it allocates money to its affordable housing fund – but right now it seems like the same amount of money. That might not be the case for non-profits.
Ben: What’s going on there?
Kelly: Well, nothing is final, but the city spends over a million dollars annually supporting local community organizations – arts centers, the food bank, a whole host of non-profits. And, like the county, which also funds a lot of nonprofits, there’s been discussion about cutting government support and shifting that responsibility to the New Hanover Community Endowment.
Ben: Ok, so, what is the city looking at in terms of bottom-line tax rate?
Kelly: They’re talking about keeping things revenue neutral right now, meaning this year’s city property taxes will be the same as last years – but a lot of fees are likely to go up. That ranges from fire district fees to parking fees to fees on the golf courses. It seems like they’re trying for a lot of creative ways to raise revenue without actually raising taxes.
Ben: I’m sure that’s weighing on some council members extra heavily, since it is an election year for some of them. Thanks for watching that riveting meeting, Kelly.
Kelly: No problem.
