WILMINGTON — The Wilmington Town Council passed a local law allowing them to override the property tax cap and adopted a preliminary budget for the 2025 fiscal year following two public hearings and a special meeting on Wednesday, Oct. 30.

State law normally restricts communities from increasing the overall property tax levy by more than 2% or the rate of inflation, whichever is lower. However, communities can override the tax cap when needed by passing a local law or resolution. To pass, the law needs to have at least 60% support from the board, which in Wilmington, meant at least three of the five board members needed to vote yes.

The law passed with Supervisor Favor Smith and board members Tina Terry Preston and Darin Forbes voting yes and board members Tim Follos and Laura Dreissigacker Hooker voting no. Follos said he agreed that the town would need to go above the 2% increase, but that he wanted to see the town whittle down the amount required from the tax levy first.

“I feel that bypassing the tax cap should be more of a last-ditch thing,” Follos said during the special meeting.

With the current budget, the board members expect the tax levy to increase by around 6%. With rising costs, they argue there was no way to stay below the 2% increase. Forbes pointed out that even the raise for town employees pushes the town budget over the tax cap.

“There are no scenarios I can think of where the budget is going to stay within the 2% tax cap,” Smith said during the meeting.

Members of the public attended the meeting to voice their concerns about raising taxes. In an answer to a question during the public comment period, Smith attributed the rising costs to several factors, including a 3.5% increase in wages for town employees and higher anticipated insurance costs. Smith also clarified that the 6% increase applies to the total tax levy, which is spread across all of the properties in the town.

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Finalizing a budget

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On Oct. 30, the board also voted to pass the preliminary budget of $3.1 million for the fiscal year of 2025. The majority of the budget will be funded by real estate taxes. With the preliminary budget, the town expects to collect $1,402,612 in taxes, which is a 6.6%% increase from the 2024 tax levy of $1,316,081. The fire district, which has a separate budget process that is not voted on by the town board, is expected to collect an extra $588,435 in taxes, a 21% increase from last year.

Tax rates are expected to be $4.57 per $1,000 in assessed value, down $1.47 from last year’s tax rates. This means a homeowner with a house valued at 300,000 could expect to pay $1,371 in property taxes in 2025.

However, Smith said Thursday that the board is aiming to reduce the increase in the tax levy by almost half by the time the final budget is approved, which the board aims to do at their regular meeting Tuesday.

At the Oct. 30 meeting, the board passed the preliminary budget following a public hearing and considerable discussion about ways to shave down various costs. The board was required to adopt a preliminary budget by Nov. 7, the first Thursday after the election. The state requires towns to pass a final budget by Nov. 20. If no final budget is successfully passed, the preliminary budget becomes the final budget.

“We’re not going to spend more money — this is the amount of money that we’ve said we’re going to spend as a board if we adopt this,” Smith said. “Now how we get the revenue that Tim is mentioning, we can discuss that, but that doesn’t stop us from passing the preliminary budget.”

The board passed the preliminary budget with a four-to-one vote, with Follos being the only board member who voted no.

Follos said during the Oct. 30 meeting that the town should explore revenue sources outside of the real estate tax levy. For example, he said he expects the revenue generated from sales tax to be a bit higher than was initially estimated in the budget, based on an increasing trend in the past few years. Follos said Thursday, Nov. 1 that he would like to find more ways to utilize revenue collected from bed taxes.

Follos also said that he would support raising the yearly short-term rental fee to as high as $500. The town has data showing the average STR charges $330 per night, according to Follos, and he argues that a higher fee would not put people out of business and could generate tens of thousands of dollars in extra revenue for the town. Based on current numbers, he expects at least 115 STRs to be registered in the coming year.

Smith said on Thursday, Nov. 1 he was hesitant to make additional changes to the existing STR fees and rules until the board is able to review the effect of the change in rules that took place earlier this year. Wilmington’s new law was passed in June following more than a year of discussion. It capped the number of STRs at 150, mandated STR inspections every other year and reduced the term of STR permits to one year. This also means that registration fees will be collected every year.