Okay. Take a deep breath. Now, let out a heavy sigh.
Like it or not, the season is upon us: It is the season for preparing the city budget for the next calendar year.
This can be a very confusing time. For example, I have already heard concerns expressed by some citizens about the city operation of the local schools. What?
Friends, please hear this very clear: It is the City of Wilmington and it is the Wilmington City Schools system, but the two — the city and the school — have nothing in common when it comes to administration, operation and taxes.
School board members are elected by the citizens and work with the school administration to fund and operate the entire Wilmington City Schools system. City council and city administrators are also elected by the citizens, but they are tasked to work together to fund and operated the City of Wilmington.
None of the taxes paid for school operation can be used to support the city, and none of the funds collected for city levies or city earnings tax can be used to support the school. Those funds can never be mingled.
Personally, I completely and fully support the Wilmington City Schools administration, school board and teaching staff. They’re working hard to provide an excellent education for our grandchildren and our children. They have plenty of challenges and they work to overcome their challenges and meet the mission we have set for them – the education of our future generation.
However, the school’s budget is completely different that the city funding and budgeting, which is also quite complex. Four of our city departments provide services to the citizens and also collect funds for the services they provide. These are referred to as enterprise funds and those departments — solid waste (landfill and trash collection), water, sewer and the cemetery — are referred to as enterprise departments.
Basically, enterprise fund departments are self-sufficient. The money they bring into the city can only be used for their own operation. Money paid to the utility billing department for trash collection cannot be used for street paving or any other city expense. Funds paid to the city for a specific purpose can only be used for that purpose.
So, we have four enterprise fund departments that pay for themselves. We also have three departments that are partially funded by property tax levies. These three departments are the Wilmington Police Department, the Wilmington Fire Department and Wilmington City Parks. Funds collected for those departments can only be used by them.
These various property tax levies were approved by voters. They are the police fund, the police pension fund, the fire fund, the fire pension fund, the emergency ambulance fund, the fire/emergency ambulance fund and the recreation fund. The fire department also does EMS billing for their pre-hospital emergency medical services. This brings in a good amount of money, but, these various fees and levies do not cover all of those departments’ expenses. They also need money from grants and the city general fund to continue their annual operations.
Our Wilmington Transit department does an excellent job of securing grants and funding from other sources. Without that extra funding, we could not be able to offer such an outstanding transportation service for all of our citizens.
The Municipal Court receives money from the state, county and city. They also receive funds from the fines they impose as part of their justice process.
We have only two departments that are totally funded by the city general fund. These include the street department (they also provide all city maintenance and repair services) and city administration (all the office staff in the city).
Money in the general fund comes primarily from the city earnings tax, but there are several other sources of funding that comes into the city general fund: a portion of property tax, local government fund, money received from fees, permits and contracts, some fines and penalties imposed by the courts, but mainly the money in the general fund comes from the city earnings tax.
The city auditor and the mayor’s office work together to estimate how much funding will be available for the next calendar year. This includes estimates of the all money from taxes and levies, fees that will be collected and all other sources of revenue. We also estimate how much money will be carried-over from the previous year. All of these funds are combined to determine our ‘estimated resources’ for the next year.
It is not an exact science. Much of what is done during the budget cycle involves using the best information available to make estimates (educated guesses) about the future. These”best estimates” are then incorporated into the city budget for the following year.
It has to be a fluid document. Revenues will change and expenses will change. Our goal is to match anticipated revenues to anticipated expenses as closely as we can. Cutting expenses means cutting services that our citizens need and expect. Increasing revenue would involve bringing in more jobs, increasing fees or raising taxes.
Our goal has always been to live within our means,. But we always need to be prepared for the unexpected.
Randy Riley is Mayor of Wilmington.