Asheville City Council

“I see some smiles, so I guess I won’t see any tomatoes this afternoon.”

— Mayor Terry Bellamy on proposed staff salary increases

Asheville is in a budget bind — to the tune of $2.6 million — but at their March 21 work session, City Council members said they’re committed to raising salaries for some city employees even at the risk of increasing the budget shortfall. Inadequate pay, primarily in the Police and Engineering departments, has caused many staffers to seek greener pastures elsewhere.

For the 18 or so Fire and Rescue Department employees packing one side of the chamber, it was welcome news.

“I see some smiles,” said Mayor Terry Bellamy as the group left the chamber en masse after the issue had been discussed. “So I guess I won’t see any tomatoes this afternoon.”

The situation is severe enough that last year, Asheville hired a private firm, Fox Lawson & Associates, to study the current compensation policy and propose ways to fix the problem. At the meeting, consultant Bruce Lawson laid out his plan, which calls for a market-based compensation system to make Asheville competitive with other cities in the region. The cost: an extra $450,000 a year for the next five years (after that, it would simply be a matter of keeping up). And though that would put the city even deeper in the red next fiscal year, Council voiced support for the idea.

“I think we can find room” for the salary increases,” said Council member Carl Mumpower.

“The benefit of this program is we are going to keep experienced [police] officers on the street,” noted City Manager Gary Jackson.

Lawson’s study found that although the benefits the city offers are competitive, many salaries are not. In 2005, for example, the Police Department lost 21 officers — 15 of them because of salary concerns, said Lawson.

And while the proposed increases will strain the budget, losing experienced personnel also costs the city money, he emphasized. Recruitment-and-training costs can range from $30,000 to $35,000 per officer. “That means $495,000 invested and now gone,” Lawson said about the 15 departed officers. Losing skilled staffers also hamstrings the city’s stated goal of providing residents with the best possible service.

The turnover and vacancy rates in other departments are also unsettling, added Lawson. In 2005, the Parks and Recreation Department experienced a 14 percent turnover rate, while Public Works had a 16 percent rate and the Engineering Department experienced 23 percent turnover. Lawson, a former city manager in a number of Western cities, said a turnover rate above 10 percent spells trouble. At that point, he told Council, it starts costing more to lose people than it does to raise their pay.

Employees are motivated to stay in a job for any number of reasons, “but appropriate base salary is the necessary starting point,” said Lawson.

In Asheville’s case, the problem is biggest at the lower end of the scale, he said, stressing that he was not proposing an across-the-board raise.

Based on his months-long study, reported Lawson, 55 percent of city salaries are below market by more than 5 percent; 20 percent are above market, and 25 percent are near market averages.

Show me the money

The trouble with Lawson’s plan is that there’s no money to pay for it. With budget season set to heat up in May, Chief Financial Officer Ben Durant said the city would have to reduce costs, perhaps by cutting back on certain programs and services and scaling back capital-equipment purchases and consultants’ contracts. Conversely, the city could seek to boost revenue by raising fees (such as those for business licenses) and perhaps hospitality taxes (which are paid partly by nonresidents who stay in hotels and eat in restaurants).

Further complicating matters is the county’s recent property revaluation. Many residents have seen the value of their homes and land skyrocket, and both Council members and city staff have said they want to keep property taxes “revenue neutral” by adjusting the tax rate downward to reflect the rise in values. Although some residents could still see higher tax bills, most would not.

“Asheville city citizens are already paying more than their fair share,” declared Vice Mayor Holly Jones. Many in her gentrified neighborhood are just scraping by as it is, she said.

Some of the budget shortfall is the city’s own fault, said Mumpower, though he also leveled blame at the county and the local legislative delegation. Although the city terminated the Water Agreement last June, the state has prohibited Asheville from transferring nearly $1 million from the water fund to the general fund. The three Sullivan Acts also bar Asheville from raising water rates outside the city limits or lowering rates in specified areas as an incentive for annexation. The city has sued the state to overturn those laws.

“Shame, shame, shame on the county … to suggest a moratorium on annexation when that’s the way we expand our [tax] base,” added Jones. A resolution passed by the county commissioners that same day calls for a moratorium on all annexation in buncombe county until an economic-impact study can be done.

At some point, the city will have to look at consolidating certain city and county functions to rein in costs, Council member Brownie Newman observed.

And Council member Robin Cape suggested that raising taxes is not necessarily a bad thing. “Taxes have become this big, nasty word. … But one of the great things about living in a community is to be able to pay for bigger things together,” she said. “Taxes don’t always take from us; taxes also give to us.”

The idea of perhaps increasing the local sales tax by a half-cent withered on the vine, but Bellamy, Mumpower and the rest of City Council favored asking the county to reconsider how it distributes sales-tax proceeds to the city. Asheville sends its sales-tax collections to the state, which then returns a portion to the county for allocation. The city has very little say in what it receives, noted Jones and Council member Bryan Freeborn.

Before the budget work sessions begin in May, Bellamy asked Jackson and Durant to bring Council a detailed list of possible budget cuts to make room for salary increases and bring the budget back into the black.

“Let’s see everything,” she said. “We’ll go through them one by one.”

Nothing but blue skies

Council members showered Asheville Regional Airport Director Dave Edwards with praise upon hearing his annual report. The once moribund facility is flying high these days and competing with Charlotte and Greenville-Spartanburg for passengers.

“The airport is in great shape,” said Edwards. “We’ve had two back-to-back years of significant growth.” Traffic grew 19.2 percent last year and 18.5 percent in 2004, he reported. Total passengers last year reached 624,037.

Financially self-sustaining, the airport uses no local tax dollars, “and we’re very proud of that,” noted Edwards. Net income last year topped $2 million, and he projects it to hit $2.6 million by the end of this year.

“My colleagues in the industry are very jealous” of the airport’s volume and growth relative to its size, said Edwards.

The airport now boasts 26 daily nonstop flights — to Atlanta, Charlotte, Cincinnati, Detroit, Houston, Newark, Orlando and Minneapolis/St. Paul — plus weekend flights to Philadelphia. And though there’s no word yet, the airport hopes to add nonstops to Washington, D.C., and Chicago. Plans also call for boosting leisure travel to destinations such as Las Vegas.

Over the next 20 years, the airport expects to invest $170 million in various improvements, including covered walkways and parking enhancements, said Edwards.

But with the airport now self-sustaining, Bellamy again broached the idea of changing its governance structure. At present, the city and county appoint most of the Airport Authority’s seven-member governing board, and the city owns the land.

Council members indicated they would be willing to consider spinning off the airport, but they wanted assurances that they wouldn’t be giving away valuable assets (currently valued at about $55 million, according to Edwards). Rather than ponying up a lump sum, however, Jackson suggested spreading out the payments over time.

Bellamy said she believes it’s time for the airport to take that next step in its maturation process. But Cape took a different tack, saying the city should consider it as a potential revenue source. (Asheville now derives no direct income from the airport, other than $1 a year for leasing the land.)

Several Council members emphasized that this shouldn’t be rushed into and that other, more important issues loom on the near horizon. Simply putting together a feasibility study would take six months, noted Jackson, adding that the city would need input from the county, Henderson County, the Federal Aviation Administration and other stakeholders.

“My issue is, we need to start the dialogue,” said Bellamy. “It doesn’t have to happen tomorrow.”

In other news

In the only vote taken at the work session, City Council unanimously approved granting RiverLink a conservation easement in Azalea Park for stream-bank restoration and to protect a 27.09 acre swath along the Swannanoa River.

Although the proposed work would require the removal of several large trees, it would stabilize the stream bank, preserve the area from further development, help control flooding and downstream flood damage, and protect fish and wildlife.