Delaware's unemployment numbers continue to be at historic levels, and it is taking a big chunk out of the City of Wilmington's budget going forward.
Mayor Mike Purzycki spoke about the issue at a town hall meeting on Tuesday, in a climate where Delaware's unemployment rate is close to 20%.
"We have a wage tax, and when people aren't working, we don't get paid a wage tax. This severely affects our budget, the ability for us to pay our bills."
Over 40% of Wilmington's revenue comes from the wage and net profits tax, which the city projects losing $6.6 million from the pre-COVID budget of $65.8 million for Fiscal Year 2021, which begins on July 1.
The city also expects to lose about $1 million in property tax, and $1.7 million in other taxes.
There is also a $570,000 reduction in the estimate of licenses and permit fees, while fines could get a $1.2 million COVID reduction.
Red light camera revenue is expected to be down $665,000 due to reduced traffic flow while parking enforcement being suspended could bring another $524,000 in reduced revenue.
In the seven weeks between Mayor Mike Purzycki's budget address and Monday's Wilmington City Council Financeand Economic Development Committee meeting, more than $5 million has been cut from the Fiscal Year 2021 budget.
According to Wilmington's Office of Management and Budget Director Robert Greco, making projections for next year, right now, is very much a guessing game.
"We assumed a slow recovery, but that recovery would start to begin at the end of August. However, it would not be a quick recovery, there would still be a recession in place, and we would hope by Fiscal Year 2022 to be out of the recession, but there are now questions on whether that's going to happen, but we'll have to wait and see."
Greco told the Economic Development Committee Wilmington expects to bring in about $9 million less in the fiscal year that ends June 30, and that next year the revenue hit could be around $13.6 million in the general fund, with another $5.2 million in the water and sewer fund.
Just about every department in the city is facing cuts in a proposed $241.3 million budget, including about $424,000 from the mayor's office, and $520,000 from city council.
The Wilmington Police Department is taking a $1.3 million reduction down to $62.0 million, with two less patrol officers and a communications and data specialist position being removed out of the new version of the budget. Wilmington Fire is dropping $600,000 down to $26.2 million.
The Human Resources Department will see the deepest cut, with $2.4 million removed from it's now $32.5 million budget for Fiscal Year 2021.
Despite all of those cuts, Wilmington is planning to tap $5.4 million out of the tax stabilization eeserve to balance the budget.
Purzycki said financial responsibility is key for the city.
"We are not going to borrow money to balance our budget; we're going to budget responsibly."
The proposed budget was passed by the Finance and Economic Development Committee on Monday, it goes to the full city council on Thursday, May 28.