The city of Wilmington blames the bad housing market and a lower than expected return on investments for a potential $5 million dollar budget shortfall next fiscal year.
The city has forecast a $3.5 million drop in revenues coming up for the second quarter of 2011. Mayor James Baker’s office still believes it will end the 2011 fiscal year on June 30th with a balanced budget. However, it makes planning for the release of the 2012 budget to council on March 17th much tougher.
The mayor released figures to show how extreme the problem has grown. A release from Mayor Baker points out three years ago the city received $5 million in interest on investments. Now that interest was only $163,000 for last year. Wilmington relies on the real estate transfer tax for a large part of its budget. During that same period 3 years ago $6 million was collected. Last year, it was only $1.8 million.
Wilmington just went through a series of layoffs through attrition and other means. It has also cut $16.7 million out of spending programs over the two years.
Mayor Baker doesn’t see things getting better any time soon. In a statement he said, “The new economy should be causing all of us to think and act differently when it comes to money and expenses. The old normal is no longer the norm.”