Asheville's budget process has been on a roller coaster this year. Faced with an aggressive, GOP-dominated state Legislature that’s often been at odds with city government, and charged with crafting a balanced budget, city staff had anticipated potential sharp cuts to key services.
And when the formal $143 million proposal finally made its way to City Council May 28 after months of work sessions, community meetings and speculation, there were still some pretty big “what ifs” in the mix. Accordingly, staff began their presentation with a picture of a giant iceberg.
“This has been the most challenging budget season for the city of Asheville in quite a while,” Council member Marc Hunt observed.
Asheville has wrestled with budget shortfalls for several years now, relying mostly on hiring freezes and assorted cost-cutting measures to make up the difference. But this year, thanks to the state's taking away revenue sources such as utility franchise fees, staff is anticipating a $1 million budget gap — and that’s assuming that some looming challenges ultimately go the city’s way.
“There are still some unknowns, but there are some assumptions we have to make to go ahead and build a budget,” noted Lauren Bradley, Asheville’s director of finance and management services. “The city will have to remain adaptable. There's a lot of uncertainty with the state Legislature.”
One big assumption is that the city will retain control of its water system. In May, the General Assembly passed legislation that would transfer the system, without compensation, to a new regional authority. The matter is currently tied up in court.
Another key assumption is that Asheville and Buncombe County can hammer out an agreement to form a combined parks-and-recreation authority by January. But legislation allowing such a step still hasn't passed the state Senate. Staff plans to leverage the projected savings from the proposed merger to create an $11 million economic-development loan fund that would support a variety of projects.
If the state does take the water system, the city may have to tap $1 million in reserve funds to make up for lost revenue in the short term. And if the recreation authority doesn't pan out, Asheville may have to seek additional cuts in the second half of the budget year. Indeed, the phrase “Hard choices” has come up more than once in discussions of what might happen if none of those assumptions prove true.
Meanwhile, the proposed spending plan relies on a modest property tax increase (1 cent per $100 of assessed value), a hiring freeze and $500,000 in departmental cuts to balance the budget. The city says the tax increase is needed to bring in the same amount collected last year plus any additional revenue due to new construction. The budget also postpones some infrastructure projects until next year, when the circumstances will presumably be clearer.
“This is unlike any budget we've ever put together: We're really putting together three contingencies depending on what happens at the legislative level,” City Manager Gary Jackson pointed out.
Despite the hovering swords of Damocles, however, Bradley said the budget “is making significant progress and strides toward addressing those structural issues.” It allocates $500,000 for the Housing Trust Fund and gives city staff a 3 percent raise while avoiding major service cuts. Meanwhile, the proposed economic development fund is something staff have long pushed for. Council members voiced praise for both the budget and Bradley, who's leaving to take a job with The Van Winkle Law Firm.
Despite all the prior debate and concern, neither Council nor members of the public had much to say about the spending plan. Maybe both sides are waiting to weigh in until the June 11 hearing, when the budget should be more or less finalized.
— David Forbes can be reached at 251-1333, ext. 137, or at firstname.lastname@example.org.