Pressed to meet a June 27 budget deadline, Asheville City Council members and Chief Financial Officer Ben Durant continued to search for ways to fix a $2.4 million shortfall at the April 18 work session. The new fiscal year begins July 1.
And in a related agenda item, Council members indicated a willingness to add a capital-improvement-projects fee to the current residential and commercial water rates. Mayor Terry Bellamy also strongly urged the Council and the city’s Water Resources Department to take advantage of the city’s ability to issue bonds to raise funds for upgrading the dilapidated infrastructure and ensuring that the system has sufficient capacity in case of a serious drought. Asheville limits its total general-obligation bond debt to 8 percent of the assessed value of all property within the city.
The budget has taken up considerable chunks of recent work sessions, and last week’s marathon, seven-hour meeting was no exception, as Durant gave Council members a preview in advance of the special budget work sessions scheduled to begin May 16.
“It’s not a budget crisis,” said City Manager Gary Jackson, “but it’s definitely a budget crunch.” The estimated total expenses now stand at $78.5 million — a 3.8 percent increase over the current fiscal year. Projected revenues, however, are only $76.1 million.
The city could survive a shortfall, said Durant, but not without degrading the current level of city services — which Council members and staff agreed is unacceptable.
Council members also reaffirmed their determination not to put the burden of closing the budget gap on the backs of city taxpayers. Despite the county’s recent property revaluation, Council members said they want the tax rate to remain “revenue neutral,” meaning most city residents’ property taxes would stay about the same; a few would pay slightly more. But any significant growth in tax revenues would come mainly from new construction and annexation.
If the city did not adjust the tax rate, the new assessed values would bring in an extra $9.1 million annually, noted Durant.
“We shouldn’t subsidize golf — especially for county residents.”
Council member Carl Mumpower
That said, Durant also offered various suggestions for spending cuts and revenue increases that could help make up the deficit. They included: curtailing the use of outside professionals and contracted services, realigning city staff, and making various line-item adjustments in departmental budgets. On the revenue side, he suggested increasing the cost of certain fees and permits (business licenses, for example, would jump from $25 to $50) and requiring cost recovery for special events and services subsidized or co-sponsored by the city.
To recover 100 percent of the cost of curbside recycling, noted Durant, the city would have to raise the monthly recycling fee from $2.63 to $7.50, bringing in an additional $1.5 million annually. Another potential one-time revenue booster would be to sell off some city-owned property, netting nearly $3 million.
Council members then weighed in with their own ideas.
Vice Mayor Holly Jones said she believes the city was hoodwinked when it was persuaded to buy the municipal golf course from the county. The course loses money and relies on subsidies from the city’s general fund.
“It just makes my hair on fire,” she exclaimed.
Council member Carl Mumpower agreed, saying, “We shouldn’t subsidize golf — especially for county residents” who don’t pay city taxes. He even asked if the city could levy an “employment tax” on people who work in Asheville but don’t live there. Durant squelched that idea, noting that no other city in the state does this and that such a tax would have to be approved by state lawmakers.
Council member Bryan Freeborn said the city should dump the Civic Center. Mumpower expressed guarded support for that idea. “The Civic Center is a nice thing to have; it’s good to have a community gathering place,” he conceded. But he also questioned whether the facility provides any economic boost. Amid the ongoing discussions on whether to renovate the Civic Center or build a new one, said Mumpower, the city might also consider selling it.
And while Council remains opposed to a city sales tax, some Council members indicated at least some support for increasing the hotel-occupancy tax, as well as a new tax on prepared food and beverages in fine-dining establishments — since a significant portion of those taxes would be borne by visitors. Mumpower, though dubious about tax increases in general, said that any such initiatives should be directed toward those who directly benefit from the services in question.
Thirsty for revenue
After Durant made his presentation, Water Resources Department Director David Hanks presented Council with several new rate options aimed at raising money to replace the aging infrastructure.
The Water Department, he said, averages 1.5 water-line breaks every day — most of them large pipes (six inches or more in diameter).
And while the city already subsidizes the department’s operations, some of the largest customers, such as Anvil Knitwear, have either shut down, moved or plan to do so.
Among the options Hanks proposed are imposing a capital-improvement-projects fee, a uniform rate structure, or both.
Council members seemed to favor approving a CIP fee while maintaining current water rates. Some suggested holding off on any major rate changes until the city’s lawsuit against the state, which concerns how much the city can charge outlying and newly annexed customers, has been decided. And since new rates could cost big businesses — especially manufacturers who might decide to relocate — thousands of dollars more per month, Council seemed inclined to move slowly.
According to Hanks’ projections, the CIP fee would raise the monthly water bill for a typical single-family home from $19.15 to $22.65. But large customers on six- and eight-inch meters could see their average monthly bills increase by thousands of dollars a month (Mission Hospitals, for example, would see its bill rise by an estimated $4,180, to $25,641 per month). Commercial businesses on one-inch meters, said Hanks, would see the biggest percentage increase (69 percent), with their average monthly costs going from $69.15 to $117.15.
City Attorney Bob Oast asked Council to consider submitting three requests to the N.C. General Assembly. Under state law, the requests would need unanimous approval by City Council, and Oast emphasized that time is running out. The Legislature’s short session begins May 9, and the deadline for submitting such requests is May 17.
All three items concern annexation. The first would allow Asheville to annex certain commercial properties south of the city limits. Because the properties in question are not contiguous with the city limits and are actually closer to Fletcher in Henderson County, they cannot be annexed without special permission from the state. A similar request last year for properties near the airport also required legislative approval. Oast said the city could probably enter into an agreement with Fletcher but that legislative approval would be a better solution.
A second request would enable Asheville to annex land along the I-26 corridor linking the city to the airport and to rapidly developing areas south of town. The Department of Transportation supports the annexation, because it would allow the city to patrol the highway. “Construction work along I-26 and increased traffic, much of it local, make a municipal level of traffic enforcement in this area desirable,” Oast explained.
A third request would legalize a settlement between the city and Progress Energy regarding the Lake Julian power plant. Under the agreement, the city would stop trying to annex the site, and Progress Energy would continue paying the city a utility-franchise tax. The settlement would also amend a related 1994 agreement. If requested on time, said Oast, the local legislative delegation has agreed to take the necessary steps to enact the agreement into law.
In other news
Citing residents’ complaints about the appeals process for controversial developments such as the Staples store on Merrimon Avenue, Council members said they want to make the process clearer and fairer for residents and less likely to prompt lawsuits. To that end, City Council agreed to have the Planning and Economic Development Committee review the procedures and recommend changes.
“The Board of Adjustment is not working,” proclaimed Freeborn. “Somebody or some board needs to be the final word in these circumstances.”