City - County Gov.Leslee Kulba

Council approves 4 cent aspirational tax increase

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By Leslee Kulba –

Asheville City Council approved a 4-cent tax increase. The public had been led to anticipate only a 3-cent hike. Property taxes will increase to 46 cents per hundred dollars assessed. Members of council explained they had held the line on tax increases for as long as possible. They had depleted expendable fund balance, which was once 20 percent of the operating budget. They had frozen as many positions as possible, and depriving employees of another year of cost of living pay increases could only result in attrition necessitating expensive training for new hires.

Assistant City Manager Jeff Richardson opened the presentation with an overview of the city’s budget with no tax increase. He said the city could hold the line on taxes while maintaining a minimal fund balance of $13.6 million, or 16.2 percent of the operating budget. Employees could still receive a 3 percent cost of living adjustment. Health care costs, for the first time in a long time had not escalated, and Richardson thanked human resources management for doing their job.

Council was very diplomatic, resisting the urge to play the blame game. The city had risked losing a lot through actions of the General Assembly, but few of the anticipated damages will likely materialize, at least for this year. HB 224, requiring the city to relinquish the ETJ, is estimated to short the city $220,000. HB 488, the infamous water/sewer merger bill, is not expected to directly cost the city anything this year, but the city has set aside $2 million for anticipated legal matters pertaining thereto. The city was hoping HB 418 would allow the county to pick up the bill for some its parks and recreation expenses, but amended versions are excluding the city from participating in the regional Culture and Recreation Authority.

The city had been allowed to divert 5 percent of water revenues to recoup costs of resurfacing public rights of way torn up for waterworks. The amendment to the Sullivan Acts which allowed the transfer was rather new, so the city had only enjoyed it for one year. They applied a little over $145,000 toward renovations along Azalea Road, and were demonized by partisans banking on the public’s ignorance of the fact that other North Carolina cities are allowed to divert much, much more from enterprise funds for general-fund purposes. HB 252, which repealed the amendment, caused the city to scrap any hopes of using water revenue for an ambitious paving project in the River Arts District.

HB 998 continues to swing like a precariously-hanging sword over North Carolina cities. It proposes tax reform including the elimination of corporate and individual income taxes. The move, according to analyses by numerous think tanks, should be a real economic stimulus for the state. Unfortunately, to keep revenues up, the state will be raising taxes elsewhere. Proponents of the bill had promised its effect would be revenue-neutral, but they were mum until recently on who would be winners and losers.

The House version of the bill would not affect municipal budgets this cycle, but the Senate version would – negatively. Vice Mayor Esther Manheimer repeated President Pro Tempore Phil Berger’s suggestions for how municipalities might deal with the burden. They could impose food taxes, levy impact fees, or use water revenues. The final suggestion evoked chortles from staff members who have struggled to make their budgets work under the Sullivan acts.

Richardson was tag-teamed by the city’s Director of Public Works Cathy Ball. Ball presented Plan B, which for all appearances was the anointed plan. It proposed a 2-cent increase for “regular” capital improvements and a 2-cent increase for what Ball referred to as economic development capital improvements.

Ball explained the city had a lot of deferred maintenance. Its roads were on a 65-year repaving cycle, which is ridiculous when asphalt surfaces typically need repairs after twenty years. Ball hoped $800,000 could move the city toward a 35-year cycle. Other “regular” projects include construction of sidewalks along Hendersonville Road and Leicester Highway; greenway development; traffic calming; improvements to McCormick Field, the Municipal Golf Course, and the US Cellular Center, and the automation of the elevators in City Hall.

2 cents of the tax hike are to go toward “aspirational” capital improvements. Councilman Gordon Smith has said if the city doesn’t have a vision and invest in the aspirational, it will stagnate and decline. Ball spoke exclusively in glittering generalities as she described these investments of taxpayer dollars. They would make the city independent, and they would make the city a place people would want to live and set up shop. Aspirational items include $1 million for affordable or workforce housing, $4.6 million for multimodal transportation and gateway niceties, and $2 million for the Asheville Art Museum.

Defending the investment, Ball reminded council of the parking garages that had realized a 2000 percent return on investment. A study by Joe Minicozzi indicated the ROI was closer to 3000 percent. 4000, anyone?

Former Asheville Mayor Ken Michalove commandeered the microphone for a good twenty minutes offering public comment. He announced he was resigning from his position with Pack Place and the Asheville Art Museum that day. He alleged obfuscation and hinted that funding requests far outstripped feasible capital improvements. The city had offered to pay $2 million for HVAC, which was less than 10 percent of the proposed budget. Michalove explained the museum wanted to split from Pack Place, but he asked how much more a separate door and new furnace should cost.

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