Hedging the budget

Plans within plans: Asheville City Council members Cecil Bothwell and Chris Pelly look over possible budget scenarios at the May 17 budget session Photo by Max Cooper
Plans within plans: Asheville City Council members Cecil Bothwell and Chris Pelly look over possible budget scenarios at the May 17 budget session Photo by Max Cooper

With the details hinging on what North Carolina legislators and the courts do, Asheville City Council gave staff the go-ahead May 17 to start drafting the 2013-2014 budget. The proposal assumes that the city and Buncombe County may consolidate parks and recreation operations by early next year — a move that could save the city $5 million per year. It also assumes that the city water system will be tied up in court for the coming year: Asheville has filed a lawsuit questioning the constitutionality and other issues in House Bill 488, which mandates that the system be transferred to the Metropolitan Sewerage District.

On May 14, a judge halted the transfer, pending further review of the city’s suit.

“There's a lot still unknown and unpredictable about this,” said Lauren Bradley, finance and management services director for the city.

While state actions may not lower local revenues as much as staff estimated in previous budget sessions, Bradley still anticipates a $1 million loss. To minimize it, she recommends raising the property-tax rate from 42 cents to 43 cents per $100 value, an increase that maintains revenue at its current level. And to help deal with rising costs in health care, fuel, transit and other areas, the city will freeze staff positions — as it has since the economic downturn started — but allow a 3 percent pay increase, she explained.

But the proposed parks consolidation may not happen. Currently, the enabling legislation is in being weighed in committee in the state Senate. If the bill stalls, Asheville will need to look for additional savings by deferring expenses, Bradley said. If the city maintains control of the water system till January 2014, she mentioned, “We'll have some flexibility.”

Bradley also told Council members, “If the recreation authority doesn't happen and we lose the water system, you would have a serious challenge. … We'll have some tough decisions to make.” In such a scenario, Council would have to consider raising property-tax rates by 3 cents.

“I know we have a staff of wizards, but so much of this hinges on what happens in the Legislature,” Council member Cecil Bothwell said. He asked if Council could pass two budgets in June.

Bradley replied, that while not preferable, the city could modify the budget at the last minute to deal with changes coming from Raleigh.

“Asheville, in particular, is under attack in a lot of ways, and taxes are shifting from the state to the local level,” Council member Gordon Smith said, warning that if the city didn't invest in infrastructure one way or another, Asheville will decline. But he likes the idea of a city-county recreation authority, he added. Unlike the proposed water merger, it's voluntary and the city retains ownership of its assets.

Staff will present its recommended budget May 28, though Council member Marc Hunt said they might need another scenario “ready to go. … I don't think any of us will go on vacation in June.”

— David Forbes can be reached at 251-1333, ext. 137, or dforbes@mountainx.com.

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