Difficult decisions are on the horizon for the City of Delaware pertaining to future budgets as a result of rising costs and lack of funding.

During Monday’s meeting of the Delaware City Council, a second reading was held for the 2024-28 Capital Improvement Plan (CIP). Dominating the discussion were talks of significant budget cuts that will be necessary in order to balance the 2024 budget.

According to the proposed CIP, the city’s General Fund projections over the next five years show a deficit of $1,023,923 in 2024 that will grow to $16,632,050 by 2028. “There’s a lot of work ahead of us to make some of those cuts for next year,” Alycia Ballone, the city’s director of management, budget, and procurement, said at the top of the discussion.

While the need for increased funding has been a primary point of emphasis for the city for some time, perhaps the biggest impact on future budget projections is a result of inflation rates and ongoing supply chain shortcomings.

“We have had several projects … that have had to be rebid this year or are coming in much higher than estimates,” Ballone told the council. “And there is a comparison of the Consumer Price Index (CPI) from August 2020 through October 2022 versus the Producer Pricing Index for construction inputs. Over that time, as inflation has gone up for households, it’s reached just under 10% based on the CPI, but construction material inputs have peaked at almost 25%.”

Ballone referenced one specific project involving the installation of a traffic light in the city as an example of the rising project costs and the resulting necessity for rebidding.

“The Carson Farms signal that we just put out to rebid because it came in so high, our current engineer’s estimate now is just over $500,000 for that traffic signal at that intersection,” Director of Public Works Bill Ferrigno said. “There’s a little bit of sidewalk improvement with it, but that’s just the cost of the signal. And a lot of that is the steel industry for steel shapes. It’s one of the higher-increase items.”

Ferrigno said the same project would have been done for less than $300,000 as recently as five years ago. He also noted the increased costs don’t pertain only to local or regional supplies but to the world at large.

“We keep hearing ‘supply chain’ but it really is the supply chain,” Ferrigno added. “When we get products from around the world and they are delayed or no longer available, it makes whatever we have so much more expensive right here … The same amount of work product costs significantly more, so we end up doing a lot less. That’s what we’ll be facing with the CIP cuts; what are we not going to do because our funding is limited?”

Ballone went on to say, “With that in mind, it’s just a lot more expensive to do these non-residential construction projects. They’re escalating much faster than the typical rate of inflation that people are seeing in their homes … We’ll have our work cut out for us, and we have to realize our priorities might have to change along the way depending on market conditions as we go out to bid.”

The city’s Finance Committee held the first of two scheduled meetings to discuss potential budget cuts on Thursday. They will meet again on Sept. 13 at which time it is expected recommendations for over $1 million in cuts will be made to the 2024 budget.

Following Ballone’s presentation, Councilman Stephen Tackett weighed in on the challenges ahead, stating, “I think it’s important to say that, as we see more comments about why the city isn’t doing more to cut stuff from the budget, we are. And to hear that information that another $1 million is going to have to come out is disheartening, and now we are making that effort, unfortunately.”

Reach Dillon Davis at 740-413-0904. Follow him on Twitter @DillonDavis56.

City facing $1M in budget cuts