WILMINGTON, N.C. (WECT) – At a city council budget workshop on Monday, Jan. 29, members of city staff suggested a 2.5-cent property tax increase.

Wilmington Budget Director Laura Mortell gave a presentation on the process for developing the FY25 Capital Improvement Program (CIP), as well as providing staff recommendations to fund specific projects.

At the beginning of the workshop, Mortell laid out the challenges the city is facing.

Specifically, the limited debt model capacity, the general fund balance that is almost at its financial management policy limit, and the size of needs in the city, which total $487 million.

The financing plan that was proposed by Mortell included transferring $2 million from the GF (general fund) balance, using the proceeds of $1.8 million in sold property, and de-obligating a $1 million project that was previously proposed to replace the city administration building. This would free up $4.8 million.

As part of the financing plan, Mortell also proposed a property tax adjustment of 2.5 cents.

“With that $4.8 million, we still need to request a tax adjustment of 2 and a half cents. That would bring in about $5.62 million annually,” she said. “Right now, we’re pretty tight and this is how we need to be funded.”

In response to the proposed 2.5-cent property tax adjustment, Council Member Kevin Spears questioned the transparency of the council, specifically when it comes to the city’s purchase of the Skyline Center, formally known as the Thermo Fisher building.

“My concern is this makes us look very non-transparent as it relates to the purchase of 929 Front St.,” Spears said during the meeting. “We said that we would make that purchase without doing a tax increase, but then we turn around the next fiscal year and propose 2.5 cents.”

“Looks shady. Maybe I’m using the wrong term, but it looks like we were talking out of both sides of our mouth,” he continued.

Back in August, the City of Wilmington started the process of moving city offices to the Skyline Center. The 12-story building is the tallest in the city’s skyline.

The city spent $68 million to buy the building in July, and plans to sell nearby pieces of land and current city buildings to help offset some of the cost.

In August, Mayor Bill Saffo told WECT taxpayers would not be impacted.

“Repurposing this office campus represents $55 million in cost savings to taxpayers over construction alternatives to meet critical needs for downtown parking and city operations space, and we were able to purchase it without a tax increase,” Saffo said in August. “The city will continue to show that same commitment to fiscal discipline as it transitions operations into the building. Architectural consultants were asked to develop a plan to occupy the building with the lowest price tag to taxpayers and the most efficient use of building space, and the majority of Council agrees with that approach.”

Spears said the tax increase won’t sit well with residents, especially since the city has many outstanding projects that need to be completed.

“We have a lot of projects that have been online that we haven’t done anything with. So, we’re proposing a 2.5 cent adjustment to say that we’ll do more stuff when there are things that have lingered on for quite a while that we haven’t done anything with,” he said. “But, we spent $68 million purchasing a piece of property.”

Spears went on to say he thinks the Skyline Center was a good purchase for the city, but he believes the city needs to be held accountable. He does not think a 2.5-cent increase is fair to taxpayers when the city had previously said they wouldn’t be affected.

“We need to be transparent and we need to be held accountable for what we say,” Spears explained.

Mortell told Spears that a tax increase has always been in the cards and it is not specific to the city’s purchase of the Skyline Center.

“Respectfully, at every CIP development we have said that this would be an increase in taxes. We have said for many years that it was going to be a tax increase when we did the CIP, so it was somewhat separated from purchasing this building,” Mortell said.

Spears said while city council members and city staff understand why the increase may be necessary, residents may not.

“We put a huge emphasis on saying that we wouldn’t raise taxes then we come back around. We said one thing and now we’re going to do something else,” he said. “We have to do a lot of explaining.”

Saffo told WECT city council has the final say in how projects are funded. If city council does not approve the tax increase, other cuts will have to be made.

“We’re going to do our due diligence to make certain whatever we do, whether we hold the line on taxes or we do an increase, that we’re doing it in the best interest of the community. To make sure the community is staying in front of all the issues that we’re facing, as a growing metro area,” Saffo said.

The next budget work session will be held in March.

To watch the full stream of the FY25 Budget Work Session from Jan. 29, you can visit this link.

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