Asheville City Council explores new sales, food and beverage taxes

Nonresident and resident taxation graphic
BALANCING ACT: Although Asheville's nonresidents pay fewer taxes than do its citizens, they use many city services, leading City Council to consider new revenue sources. Graphic courtesy of the city of Asheville

Asheville may be Global Traveler’s Favorite Foodie City, as interim City Manager Cathy Ball pointed out at a City Council work session on Nov. 27. But when it comes paying for the streets, sidewalks and emergency personnel that culinary tourists and other nonresidents use, she said, Asheville’s citizens are too often stuck with the tab.

“This is the struggle this community is having at this point in time,” Ball said. “You have this influx of nonresident population that we’re serving during the day, but the bulk of the cost of those services is being paid for by the property taxpayers.”

To tip the financial balance in a fairer direction for those who live in the city, Ball proposed two new taxes for Council’s consideration. The first, authorized under a state law that allows local governments to levy a tax specifically to support “public transportation systems,” would add a quarter-cent to all purchases made in Buncombe County. The second, a 1 percent tax on prepared foods and beverages bought in the city, could be used as general funds. Both taxes would require approval by voter referendum, projected to take place in 2020.

The transit sales tax would have to gain support from the Buncombe County Board of Commissioners, which has the power to request the referendum under state law. Ball explained that the city would partner with the county to update the recently completed Transit Master Plan, adding bus routes into outlying areas and improving the county’s Mountain Mobility service, which provides transit for people with disabilities.

Ball noted that the higher sales tax would disproportionately affect low-income residents, who spend a greater percentage of their income on basic needs, but she said it would benefit people with transportation barriers. According to a 2013 passenger survey conducted by the ETC Institute, 68 percent of Asheville’s bus riders make less than $20,000 per year.

Asheville would need to go to the N.C. General Assembly for permission to hold a referendum on the prepared food and beverage tax. That enabling legislation would set limits on the money’s usage, but Ball gave as an example spending to promote “increased cleanliness in business districts that have a lot of restaurants,” better public safety and improved sidewalk maintenance.

Although Ball estimated that roughly half the proceeds of this tax would come from tourists, Council member Sheneika Smith asked about its impact on the working poor, whom she said often rely on prepared foods. The city’s proposed strategy of earmarking funds for food security, she said, was out of step with the reality for many low-income families.

“I don’t think it really has as much to do with food security as it has to do with convenience, because people who are working all the time don’t have time to prepare their food,” Smith said. Ball responded that the plans are in the early stages, and the city would develop more detailed approaches with community partners.

Also responding to equity concerns, Council members Julie Mayfield and Keith Young both suggested that the tax be adjusted to target only alcoholic beverages. “We have a lot of people who come here to drink beer — sorry to all of our brewery friends,” Mayfield said.

Absent from Ball’s presentation was any proposal to lobby for changing the allocation of Buncombe County’s 6 percent room tax, which is administered by the quasi-governmental Buncombe County Tourism Development Authority. According to state law, 75 percent of that money must be spent on marketing, while 25 percent goes to a Tourism Product Development Fund to pay for capital projects that increase area visitation.

The decision to focus on strategies other than seeking a slice of the room tax pie, Ball told Xpress after the work session, was tied to a tentative agreement between the city and the BCTDA that would allocate $5 million from the TPDF annually for 10 years. The money could fund projects such as sidewalk improvements, renovations to the U.S. Cellular Center and downtown placemaking. Ball estimated that $1 million of TPDF money would still be available each year for projects by county government or community organizations.

Council directed staff members to continue their exploration of the new taxes, but Mayor Esther Manheimer acknowledged that the measures would not be a perfect solution to the city’s revenue needs. “We don’t have a scalpel to try to tax visitors,” she said. “We’re limited in our tools, so we’re trying to find the tools that best reapportion the tax burden for folks living and visiting in Asheville.”

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About Daniel Walton
Daniel Walton is the Green Scene editor and city government beat reporter for Mountain Xpress. His work has previously appeared in Capital at Play, Edible Asheville, and the Citizen-Times, among other area publications. Follow me @DanielWWalton

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12 thoughts on “Asheville City Council explores new sales, food and beverage taxes

  1. NFB

    Whatever happened to John McKibbon’s promise to work to get more of the room tax revenue to go to help the city pay for some of these services? He made that promise nearly 3 years ago in exchange for city approval of his plans to turn the BB&T building into yet another hotel, but ever since then it has been total crickets.

    • Mike

      McKibbon paid the mandatory extortion into the “affordable housing pot” to get BB&T approval. Keith Young referred to it by some name like the “McKibbon Rule” in the rejection of the Mathews Ford Hotel. Even the City Council was smart enough to know that McKibbon was not going to be able to shake loose any of Brownie Newman’s (and the corrupt county admins) money though.

    • luther blissett

      I think we got an answer recently: the BCTDA is pausing its annual grant program and will sit on its giant pool of money for a while. The balance of power in Raleigh has only slightly budged, but that’s where the allocation of the occupancy tax can be changed, and the county’s representatives ought to have a bill filed as soon as the NCGA begins its new session.

  2. Enlightened Enigma

    City has PLENTY of income/revenue but being managed poorly. very poorly.

    Is the latest city appeal of the Patel Hotel case, already approved by the 2nd highest court in NC, racist? Why would they go this far?

  3. Robin

    Maybe my memory is faltering as I age, but didn’t the City just pass a brand new vehicle tax that nets them $30 off of every vehicle registered in the City of Asheville, and that money is supposed to be specifically used for road works (streets and sidewalks)? Where’s that money?
    Also, didn’t the City pass a tax increase a few years ago that specifically said that they needed a four cent tax increase to be used exclusively for transit, streets, and sidewalks? Where’s that money?
    Apparently, this City Council and City Manager thinks that the citizens of Asheville (and now Buncombe County) are idiots who can’t recall why their tax bill keeps creeping up, and that we’re OK just paying more and more for their bad decisions? I recall, and I think I know how to help.

    Here’s some ideas on where to get money for these needed City functions:
    -Gary Jackson inherited a staff of four. Cathy Ball has about 25 positions. Cut an Assistant Manager (preferably Cathy Ball) and 20 of her underlings, and you get an instant million dollars (25% of that million is just Cathy Ball).
    – Take the tax increases that previous Council’s had already promised to Asheville citizens for these services (vehicle tax and four cents of the already assessed taxes), and you get an instant solution. That’s $1.4 million from the vehicle tax, and a whopping $8 million from the four cents that a previous Council has already sacked us with for this very same topic.
    – Eliminate all of the “new-age” managers and coordinators who assist with problems City Council thinks that we need solved, such as: Sustainability Manager, Equity and Inclusion Manager (who also has an assistant “Human Relations Analyst”), Media Manager, Social Media Manager, Neighborhood Coordinator, etc. Add in benefits and bonuses, and that nets another $1 million.
    – Get rid of Cathy Ball’s friends and relatives program. Her husband, niece, hair dresser’s husband, banker’s husband, ex-neighbor, etc. (and many more) all work for the City. You could probably save another million dollars there.

    In summary, stop redirecting the taxes that are already collected for “core services” and using them for pet projects, buzz worthy position, and personal favors. Do that, and the City could net $12.4 million dollars to apply back to core services, which to most people means: Police, Fire, Roads, and Trash.

  4. Pete Kaliner

    The “deep dive” into the cost of tourism didn’t actually assess the cost of tourism.
    This was one of least informative local government presentations I’ve seen in 20 years.

    • Robin

      Eight years ago the City produced a “Financial Crossroads” report (link below). In a nutshell, it said that the City spends more than it takes in, and they needed to do something. Back then, it was the mean general assembly and the lack of growth options that made the City’s budgets so tight that they required drastic actions and tax increase. They barely mentioned the fact that they were spending more than they were taking in.

      Fast forward to 2018, and it’s the mean old tourists who eat up our infrastructure, without paying their fair share. Once again, they barely mention that they’re spending more than they’re taking in, and they need a tax increase to survive.

      How about trying some of the following:
      – Responsible spending on core services (want a referendum, ask the public what’s a core service) Why not, the City spent $30,000 on a meaningless referendum last year to prove a point.
      -Stop wasting taxes on social programs. You’re never going to have enough “affordable” housing; build more, and more show up wanting it. The same for the homeless issues.
      -Treat tax payer money like it was your money. I assure you that if Mayor Manheim or City Manager Ball’s family were going without a core need (like safety or transportation), they certainly wouldn’t pay for cable TV, a masseuse, or other trivial niceties.

      https://mountainx.com/files/Financial_Whitepaper_final.pdf

      • Lulz

        LOL treat taxpayer money like it’s their own lulz. You don’t get it do you? If you can’t pay they take your home and “sell” it to some insider crony. They don’t need to treat your money like theirs. All they need to do is make an example of a few people and hope the fear of losing what you worked your ass off for is enough. This ain’t no government where you and I have a say so. It’s one where they will crush you for stepping out of line. It’s evil. So you either vote for those that “promise” to reduce taxes or those that “promise” to transfer it over to others to keep them voting. There’s no middle ground.

        Wake up.

  5. KarenW

    It truly is amazing how turning to taxation of residents seems to be the go-to answer, exacerbating problems that never get solved around affordability. Not everyone has a good salary or great benefits. I agree with the comment by Robin on prioritizing “core services”. Cut back on wasteful burden to citizens. Guess now we’ll be footing a study on scooters… that’s not what I’d choose my taxes to go to given the various needs.

  6. Lulz

    The insanity of the core Asheville voter is amazing. Why oh why do the same keep getting elected and then we’re all surprised that nothing changes? Did anyone see the part about property taxes being lowered? I didn’t think so. All they’re doing is seeking more revenue streams under the guise of taxing tourists. But in reality it’s not going to lessen any of the taxes on residents

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