As Asheville City Council members convened for a two-day retreat to chart their legislative goals for the year, word came that the city’s financial fortunes appear to be retreating as well.
While the situation isn’t dire, Chief Financial Officer Ben Durant told Council members during the Feb. 4-5 planning session, the city may be facing a $1.3 million budget shortfall in the next fiscal year, which begins July 1. The total budget for the current fiscal year is about $130 million.
At this point, the problem is purely theoretical: Budget deliberations won’t begin in earnest for a few more months, so both the revenue and expenditure figures are projections. But Council members emphasized that they will find ways to make up any deficit without a tax increase.
“I can tell you right now that raising [property] taxes is not going to be an option for me,” declared Council member Holly Jones, echoing several others.
Among the ideas mentioned for staving off the red ink were leaving staff vacancies unfilled and looking for ways to reduce the cost of employee benefits. Mayor Terry Bellamy also raised the possibility of moving health coverage to a private insurer (the city is currently self-insured). “The biggest expense is wages and salaries and fringe benefits,” she noted. Another option is boosting efforts to crack down on tax scofflaws.
In the next fiscal year, benefit costs are projected to increase by 10 percent, due largely to increased health costs. Meanwhile, salary costs could rise by more than 7 percent, thanks to new positions added last year and the impact of the city’s “market-based pay-plan adjustment,” Durant reported. Now in its third year, the annual adjustment will tack on some $450,000 in raises and cost-of-living increases.
Slower growth in revenues also plays a prominent role in the equation, noted Durant. After years of healthy growth, the city’s property-tax revenues are expected to increase by just 2.5 percent in 2008-09. That’s significantly below both the 5.5 percent in 2006-07 and the 10-year average of 3.4 percent. In the current fiscal year, property-tax revenues have grown by just 2.3 percent so far—the lowest in a decade, he said.
Yet another problem is shrinking sales-tax revenues. Growth has slowed from 8 percent last year to a mere 1 percent in the current fiscal year, and Durant is projecting 3 percent growth for fiscal 2008.
The culprits, he said, are the current housing downturn, a tightened consumer-credit market and a general economic slump, exacerbated by higher energy costs.
Vice Mayor Jan Davis called the news “a shot across the bow,” though he noted that negative revenue forecasts don’t always pan out.
Shortfalls are a normal part of the budgeting process, and the projected gap is far from the largest Asheville has faced in recent years. At this time last year, for example, Council members were told they might have roughly $2 million beyond what was needed to cover planned expenses. The year before that, on the other hand, they successfully addressed a $2.4 million budget gap.
Besides providing glum news to start the new year, the budget forecast also colored the retreat’s main agenda—setting goals and priorities for the coming year. Although every Council member came armed with a wish list of budget-padding items, in the end, Jones noted jokingly, the six broad goals they agreed on “don’t cost us anything”—at least for now.
Those goals call for focusing on: public safety (including police and fire protection as well as other issues affecting the general public’s health, safety and welfare); improving intergovernmental relations with county, state and federal elected officials—with particular emphasis on resolving the current water dispute with Buncombe County; pledging to become a leader in clean energy and environmental sustainability in the Southeast; tackling regional growth-management issues; holding the line on taxes and exploring possible tax-relief measures; and developing a comprehensive plan for the city’s infrastructure needs.
Council members and staff pledged to spend the next year formulating specific legislative and policy measures to meet those goals. To that end, Council also agreed to resume holding a work session on the third Tuesday of each month, in place of a formal meeting. With a full plate of issues confronting them and new Council member Bill Russell working to get up to speed, the change was felt to be in both Council’s and the public’s best interest.
Although there was general consensus on the goals, not everyone supported of all of them. In an effort to focus the list, for example, Council members Carl Mumpower and Brownie Newman suggested trimming intergovernmental relations, which should be an ongoing goal anyway. Mumpower also took issue with regional growth management, saying that such efforts routinely fail. And though Bellamy cited long-term planning efforts to address growth in the Charlotte area, Mumpower countered that the state’s sprawling, congested metropolis should hardly be considered an example for anyone to follow.
“Everybody’s talking about growth management, but I don’t see anyone really succeeding,” said Mumpower. “It’s more about illusion than reality and keeps us from tackling things we can control, such as public safety. I just see this as a dead end for us.”
At the very least, he added, City Council should use another term, such as “regional or local planning,” since “growth management” could send the wrong message “to those people who might bring dollars to Asheville.”
Meanwhile, Council member Robin Cape floated the idea of a moratorium on further downtown development until a master plan for the central business district is finished. The city is partnering with an outside firm to develop the plan.
Citing recently approved major downtown projects and proposals for more high-rises, Cape pressed her point that both local and regional growth management are vital to the city’s long-term future.
And though her moratorium idea fell on deaf ears, Cape said: “So many people I’ve spoken with just think we’re trying to fix the car while the engine is still running. We’re kind of behind the cart [on growth management], but better late than never.”