"As we enter the third year of what has become the country's worst economic downturn since the Great Depression, it is fair to say that local governments are implementing unprecedented changes to cope with the financial crisis that represent a different way of doing business."
Those words, penned by City Manager Gary Jackson, begin the official report on the city of Asheville's proposed budget for the 2010-11 fiscal year. But Jackson didn't stop there.
"As you are aware, revenues have been down in all areas — local and state alike — and there are no reliable trends that can accurately predict when we can expect full economic recovery. In fact, many experts believe that our current financial reality might be one that is here to stay well into the foreseeable future.
The "new normal" is a term city staff have used repeatedly in recent months when discussing next year's budget, and struggling with that new reality has produced some of the longer and more contentious budget negotiations in memory. Since January, Asheville City Council members have struggled to close a projected $5 million budget gap, and after reaching some agreement on how make up the bulk of it, they've wrestled, often with little consensus, on how to address the remaining $1 million shortfall.
What's emerged from all that wrangling, though still subject to change, reflects a series of compromises. Property taxes aren't being raised, though some Council members had suggested this as a way to close the gap while preserving current services. And unlike the two previous years, the city isn't tapping its reserve fund. Cuts in mass transit were mostly avoided. Water fees will increase, but not as much as originally proposed. City staff is essentially intact, but few can expect pay raises. And while fees will no longer be waived for many festivals, Asheville's best-known special events will still receive some in-kind support.
So, what is getting the ax?
Employee benefits and compensation account for well over half the budget, and the biggest proposed reduction — $2.29 million, all told — targets overtime, temporary and contract work, plus travel and training for city employees. Three other major cuts — a selective hiring freeze ($878,000), a salary freeze for higher-paid staff ($340,000) and an adjustment to the health-care plan ($300,000) — also affect city employees.
Some services did take a hit: Restricting community-center hours, scaling back brush collection to once a month and reducing funding to outside agencies is projected to save $975,000. The Asheville Film Festival is on hold, and the city may sell or discontinue it. The festivals budget as a whole loses $22,000, and except for six "core" events (including the drum circle and Downtown After 5), fee exemptions have been sharply curtailed.
Elephants in the room
Another popular expression during the budget wrangling was "the elephant in the room," a reference to underlying or unacknowledged fiscal issues. But like the blind men describing the pachyderm, Council members seem to differ significantly concerning the budgetary beast's perceived shape.
"We're faced with the question of whether we become a lower-service city or we decide that we want to raise taxes," Council member Cecil Bothwell told Xpress. "The general consensus on Council seems to be that raising taxes is absolutely off the table. It is not with me. It seems to me that city governments do good things, and it can be worth paying a little more to get those things."
During budget deliberations, Bothwell broached the idea of a 1-cent increase per $100 of property value, which would generate roughly $1 million while costing the average taxpayer about $20 a year, according to city staff.
"From what I hear from people about wanting sidewalks, for example, I think most people would pay $20 for that; it's not a big torment," notes Bothwell. "When we frame it as 'increased taxes,' everybody flips out, but if you talk about $20 a year, it's different. I think this recession we've come into isn't going to change substantially for years. I think we're going to be faced with cutting services incrementally. Would people prefer to see a tax increase or would they prefer to see festivals end?"
Council member Bill Russell, however, strongly opposed raising taxes during the deliberations and voted against some increases, including the water fee hike.
"In the '90s and the first decade of this century, Asheville was riding this wave of increased property values and increasing revenue," he notes. "We just allowed the government and city services to expand. That's just not a sustainable model, especially when you go through the worst recession we've had in a while.
"I think if we analyzed all the services we do, we put a lot of money into staffing, into health care. We need to … make sure all the positions we have out there are truly necessary. Spending $100,000 on a sidewalk is different from spending $100,000 on a salaried position."
Asheville's taxes "are really high," says Russell, adding with a chuckle, "I don't think anyone would say our taxes were too low — except Cecil Bothwell."
In a close vote on the 5 percent water-fee increase, Council member Esther Manheimer criticized some colleagues' reluctance to either make cuts or raise revenues, arguing, "We have to start saying 'yes' to something" to balance the budget.
"I saw that as having your cake and eating it too," she explains.
But Manheimer now believes Council has taken the right course. Indeed, whatever their disagreements, many Council members seem broadly supportive of the proposed budget, praising staff for their work in an exceptionally tough year.
"I think there's an unwillingness, absolutely, to raise taxes but a willingness to raise fees, and that's good, within reason: They do affect more people who are using a particular service. There's a lot of different ways to balance a budget," she observes. "It's never fun to cut $5 million, but I think these cuts are well-considered; they're not knee-jerk."
Russell, meanwhile, calls it "a well-balanced trimming process that, quite frankly, hurt some departments and will be felt more than in the past. But overall, I think it was certainly a good process; it was proactive."
The proposed festival cutbacks sparked complaints from representatives of events such as the Martin Luther King Jr. Day celebrations, the Memory Walk and Downtown After 5. Kitty Love of Arts 2 People echoed others in telling Council "Now is not the time to cut cultural events." Council members sympathetic to mass transit or business interests made similar comments throughout the budget deliberations.
Manheimer, though, believes the budget spreads the cuts "across the board. I don't think one area's been singled out. Obviously, those areas that aren't essential services, such as garbage, water, fire, police, are going to be scrutinized closely. In the eyes of many, subsidizing festivals is obviously a luxury."
Bothwell favors preserving "the services that are broad-based … like transit. In a bad economy, more people will ride the bus. Obviously, police and fire: not much wiggle room on those. We can cut back to every other week on garbage collection. Truthfully, the festivals and all are great. But I don't see … how one could justify cutting transit and funding a festival."
Russell, meanwhile, thinks the festivals need to cover more of their own costs. "When I took over as chair of the Finance Committee two-and-a-half years ago, any of these groups could come to the city … and the city would waive all these fees," he recalls. "That's just not good business sense. There are guidelines now for the major anchor events; there's a ranking scale. That takes politics out of it."
Unlike Bothwell, Russell feels "We have to take a serious look at transit. Expenses have nearly doubled: It's getting close to $6 million a year, and it only brings in $1 million. That's not a sustainable model." The city's health-care plan, he notes, "is also a target," adding that items such as parks are enjoyed by the public and relatively inexpensive.
Council members will hear public opinion at their May 25 meeting before casting a final vote on June 22.
Bothwell, however, believes the city is facing a number of what he calls "ticking time bombs": repairs to the City Building's roof and the inability of both the Pack Square Conservancy and the Grove Arcade Public Market Foundation to pay back their respective debts. "I don't know how we're going to deal with that, but I think we're going to raise taxes or radically cut services," he predicts.
Russell thinks the city needs to reconsider rules and regulations that increase costs. "The city has so many silly little rules, like sending the fire truck out to check every time someone plugs in a PA system at an outdoor event," he points out. "Therefore we're going to have to charge more to recover the cost. There are too many rules and regulations that shouldn't be there, but [changing] that doesn't fly well in Asheville: We like our rules."
But whatever lies ahead, Manheimer feels good about the proposed budget. Constituents, she says, are "pretty pleased we've been able to slim down the budget without raising taxes and without having too much of a noticeable impact on services," she says. "But going forward, we're hoping there's going to be room for some much-needed capital improvements."
David Forbes can be reached at email@example.com or at 251-1333, ext. 137.