Wilmington City Council FY27 Budget Work Session - February 6, 2026
Wilmington City Council FY27 Budget Work Session - February 6, 2026
The Wilmington City Council held a special budget work session on February 6, 2026, from 8:30 AM to 12:27 PM at the Skyline Center. The session focused on three main topics: an update on agency funding, a strategy discussion for the Capital Improvement Program (CIP), and a follow-up on adopting a living-wage pay philosophy based on 60% of Area Median Income (AMI). No formal votes were taken; the session was intended to provide direction to staff for the FY27 budget.
Agency Funding Update
- Rachel Schuler, Housing & Neighborhood Services Director, presented a proposal to rebrand the Human Services Grant Program as the "Community Investment Program."
- The current program provides competitive grants to nonprofits, with awards averaging $20,000 annually. FY26 funding totaled $720,647 (all general funds, with about $130,000 from Community Development Block Grants).
- Proposed changes include: establishing an aggregate program budget in the FY27 budget, developing Requests for Proposals (RFPs) for multi-year funding (up to 5 years), and having the Community Relations Advisory Committee (C-RAC) review and recommend awards to Council.
- Staff argued the new approach would better align with the City’s Strategic Plan, the Greater Downtown Plan, and community feedback, while also providing nonprofits with more stability.
- Councilmembers expressed support for the concept and asked about timing, impacts on nonprofits, and alignment with economic development grants. Staff will proceed with the proposal.
Capital Improvement Program Strategy Discussion
- Heather Padgett, Assistant Budget Director, reviewed the current CIP, which is a 5-year plan funded partly by dedicated tax rates (currently ~1.5 cents per $100 assessed value, reduced by revaluation).
- Projects were categorized as "non-negotiable" (critical bridges, bulkheads) and "negotiable" (important but more flexible).
- Non-negotiable funding shortfall: $23 million (including Pine Grove Bridge replacement $17.9M gap, CFCC Bulkhead $879K, Front Street Bridge $693K, Water Street Bulkhead repair $4.2M, etc.).
- Negotiable projects shortfall: $30.3 million (including Independence Screen Wall $371K, Bradley Creek Kayak Launch $102K, Water Street Park $1.2M, Lions Bridge $1.1M, Pine Grove North $11.9M, Pine Grove South $14.0M, Wrightsville Ave Sidewalks $512K, Towles Road Emergency Access $1.1M).
- Total combined shortfall ranges from $51.4 million to $63.3 million depending on grant awards and surplus allocation.
- Funding strategies discussed: (1) Use existing debt for non-negotiable projects with no tax increase (but delays); (2) Delay or eliminate negotiable projects; (3) Increase tax rate to close the gap.
- Staff recommended a tax rate increase of 0.61 cents (equivalent to $27.18/year or $2.26/month on a median home valued at $445,600). This assumes securing the EDA grant for Water Street Bulkhead and reserving surplus funds for contingencies.
- Councilmembers asked about project timelines (2-5 years for completion), the status of 2014 and 2016 bond projects, and community engagement. Staff announced a new monthly project dashboard will be live by July 1, 2026.
Pay Philosophy Follow-up: Living Wage at 60% AMI
- City Manager Becky Hawke and Human Resources Director Clayton Roberts presented a follow-up to the November work session on adopting a living wage defined as 60% of Area Median Income (AMI) – $45,531 per year for full-time employees.
- Current situation: 13% of full-time employees (138 people) earn below 60% AMI; 51% earn below 80% AMI. Positions affected include public works operators, grounds technicians, housekeepers, and administrative staff.
- Proposed changes: Raise minimum pay to $45,531, rebase all pay grades from that floor, and cap individual increases at $15,000 to focus raises on lower-paid employees. Remove N1, N2, and E3 grades.
- Impact: 100% of employees would earn at least 60% AMI (up from 85%). 74% would earn 80% AMI (up from 47%). First responders would see an average 19.3% increase. Police officer starting pay would rise to $62,593; firefighter to $58,036.
- Total cost to implement: $17.3 million across all funds, with a $14.6 million impact on the general fund. This could require a worst-case tax rate increase of 4.1 cents ($183/year or $15/month on median home). Staff emphasized this would be the worst case and they are working to reduce the number through vacancy review and organizational restructuring.
- Staff recommended full implementation in FY27 to avoid a tax increase two years in a row and to achieve market competitiveness immediately. A phased approach (2.1 cents in FY27 and 2.0 cents in FY28) was presented as an alternative.
- Councilmembers expressed support for the philosophy and asked about retention, vacancy rates, and the value of benefits. Staff will continue refining the cost and return with a firm tax rate adjustment at the March work session.
Key Outcomes
- Agency Funding: Council signaled support for the new Community Investment Program approach; staff will include an aggregate budget in the Manager’s Recommended Budget and develop RFPs aligned with strategic priorities.
- CIP Strategy: Council discussed but took no formal action; staff will bring a refined recommendation to the March work session. The preferred funding scenario appears to be the 0.61-cent tax increase with EDA grant assumption and surplus reserve.
- Pay Philosophy: Council expressed general support for adopting a living wage at 60% AMI. Staff will continue evaluating vacancies and revenue growth to reduce the general fund impact and will present a specific tax rate proposal at the March work session.
- Next meeting: March 2026, with additional budget topics including paving, transit, and further refinement of living wage implementation.
Meeting Transcript
Are you here? Here we're allowed. Are you here? Here's the member of the are you here? I am mayor pro town. Here we have four. Now that's recognizing all to me. Thank you, Mayor Pro Tem, uh, members of council. We are appreciative of the time this morning to go over a couple of additional topics that will help inform our FY27 budget. The first one will be an agency funding update, and then we will talk about our capital improvement program and the strategies around how to complete that. And then we'll have a bit of a refresh and then a follow-up with some additional information related to pay philosophy and the living wage that we are hoping to move towards for our pay scales. So with that, I will turn it over to Rachel Schuler, our housing and neighborhood services director, who will talk about agency funding. Good morning. Thank you. So the human services grant program. It was previously known as the public services funding. A lot of different names, but it is the competitive grants process for nonprofits that have been a part of the city's uh budget for decades. Other communities throughout the state have similar programs, though the funding sources and their sort of process and review process vary. Locally, the funding for these nonprofits have been general funds, and it is a way that the city really has leveraged some of our federal dollars. We have a an allocation that we're able to use of community development block grants that's set aside for public services. And so this is a way to again leverage that and leverage the impact of the community to help implement the strategic plan. Shown on the right are the funding that has happened. Oh, I'm sorry, over the past few years. The awards for each program has ranged from about 12 to 45,000, with most averaging around 20,000. Shown here is just a reference for the strategic plan priorities. Uh you can see where these grants have sort of fit into the existing strategic plan. This is the first time we've been we will be doing outside agency funding with the new strategic plan though. Currently, this is the process shown here. Staff did propose some changes to the review process last summer to add in additional review steps with council in mind. But this is generally how it's been happening. So starts staff starts with a target budget and receives applications for a range of programs. These applications are reviewed by staff currently, um, though the process did vary over the summer. And program awards are part of the manager's budget, which is later adopted. Over time, the scope of services of these programs has really broadened, and applications have moved somewhat away from maybe some of the the target core goals. There have also been some other catalysts for changes. Um as mentioned, the adopted strategic plan. So as mentioned, the adopted strategic plan, um, as well as near incompletion of the greater downtown plan with that both have uh implication implementation strategies that could be supported by these funds. Uh incorporating community feedback both from community survey as well as comments received from residents. Uh we've heard things ranging from recreation hours, workforce development, and other needs for our vulnerable populations. Start with a total and instead of backing into the awards. And I'll go through that proposal process, what that would look like in a second. And then again, instead of having this open application where we're really seeing what the community is reacting to, we would recommend having specific RFPs for the service delivery that the city is looking for with our priorities. And then finally, one of the other recommendations is adding the review and recommendations by the community relations advisory committee, the C RAC. It's restarting, and it's what we've seen in other communities where they have that participation from some of the residents to be able to have that first vetting so that they can review these applications and proposals and make that recommendation through staff to council. And this would be really elevating staff out of just the day-to-day and putting that into that council-appointed committee. So if this is to move forward, this is what the new process would look like. Uh highlighted in red are some of the bigger changes in the process. Again, putting the RFP and review process following the adoption of the budget. This will likely delay awards into the fall, but due to the new model that's being proposed, staff would also recommend extending the agreements to be longer multi-year funding structure. We're currently on a two-year cycle, and so adding this longer term sort of funding agreement, service agreements, we could look at additional years.
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