Why Wilmington Is Experiencing Financial Hardships

Filed in Delaware by on June 2, 2014

That is the title of an opinion piece published in the NJ yesterday from Dace Blaskovitz — a member (until very recently) of the WEFAC (Wilmington Economic and Financial Advisory Council). He’s had an up close and personal look at Wilmington financial trends for quite a few years, and recently quit the WEFAC (this isn’t news?) — according to him — after Mayor Williams announced he was going for a 9.9% property tax increase. His POV of Wilmington’s financial woes is worth reading — much of it is very familiar. I can’t vouch for his numbers on the trends he discusses, but total payroll *has* gone up — this is due not just to the hiring of people but also due to increased health care costs. That last one is true for most employers who provide health care benefits. Note also that most of the city employees have not had COLA increases in several years and I believe that all of the city’s unions are working without a contract.

The biggest recent increases in payroll have come in the Mayor’s Office, the City Council’s office, the Finance Department and the WPD. Increases to the WPD payroll come from additions to the force — often funded by some grant that someone found — but those grants run out and then the city is left to figure out how to cover all of these officers. Few pay much attention to that (exceptions being Bud Freel and Loretta Walsh), though, that you may have money to add 20 officers today, but in 2 or 3 years you have to find the money to pay them from the General Fund. Pensions are definitely underfunded and there is one old WPD plan that many have been trying to get better COLA from, and that has been turned down. The WPD did experience some layoffs/reductions in rank at the beginning of the financial crash and the WFD implemented a rolling bypass program (closing a station for 24 hours on a rotating basis) then dismantled a rescue unit. The rolling bypass program stopped at the beginning of the Williams Administration and the WFD is especially resistant to ideas to reduce costs. But Blaskovitz’ point is that the city hasn’t been as frugal as it could be, and I’d agree on that.

I scratch my head, though, on the decrease in property tax revenues. He could be right about this, which means that there are parts of the city that are emptying out that I don’t see. It might be that the financial crash as led people to challenge their assessments to see if they can get a lower burden. Still, I know of at least three apartment buildings that are set to come on line in the next few years downtown. Perhaps there is a big transfer of property to non-profits (who mostly pay no property taxes), or lots of people taking advantage of some of Wilmington’s abatement programs. But the way to tell that people are leaving the city is to check in on wage taxes collected and I don’t know what that projects.

Certainly Wilmington has financial issues and if I read the vote on the budget correctly, there are very few in the City’s leadership who are willing to step up to the plate and really deal with this. Bud Freel, Loretta Walsh, Maria Cabrera, Nnamdi Chukwuocha and Trippi Congo voted against the increase. Still the budget passed and the Administration is going to collect a $1.4M surplus, plus whatever funds are available from the 80 positions that are vacant, but funded.

Let’s add into the mix two major borrowings that the City authorized last August. One was $4.37M in General Obligation Funds to buy property in Southbridge to place it into conservation as the South Wilmington Wetlands Project. This project has been long (at least a decade) in the study and making and is intended to restore some of South Wilmington’s land to wetlands in an effort to help relieve some of the flooding projects there. They also authorized the borrowing of $4M to finance the Wilmington Housing Partnership’s acquisition of properties to rehab or construct housing. The disposition of this $4M is particularly opaque — it looks like most of this money is being spent to acquire properties on Wilmington’s East Side as part of a large redevelopment program. But I don’t know if anyone has any accountability for these funds. In the meantime, groups like West Side Grows and the Creative District — groups with visible plans and visible capacity — aren’t benefiting from city spending at this scale. Adding on — there are fnds spent by the Real Estate and Housing Department (Neighborhood Stabilization, Strategic Funds and so on) that also don’t appear to have any visibility. The usual non-profit housing community doesn’t know how this money is spent and City Councilpeople who inquire are told to ask the Mayor’s office.

So from where I sit, the fiscal accountability looks like it is getting worse — not better — and we have to remember that there are 8 Councilpeople who voted for the tax increase who can be expected to rubber stamp any spending of the surplus. Meaning that we know that City Council will not be in the business of imposing any discipline on this Administration — which is (unfortunately) their usual abdication of their responsibility.

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  1. anonymous" says:

    Good article, but why doesn’t it mention that health insurance premiums in Delaware are now higher than in most other states, no doubt due to corruption and mismanagement in the DOI under Karen Weldin Stewart? It’s common knowledge that she couldn’t care less about consumers because she’s always been in the pockets of the insurance companies.

  2. AQC says:

    Excellent analysis. I feel like Wilmingtonians have just become too complacent. We need to quit voting all the same old characters into office.

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