School or scandal?

Amid continuing tough economic conditions, A-B Tech is asking Buncombe County residents for help. On Nov. 8, voters will weigh in on a quarter-cent sales-tax increase to fund capital improvements that officials say are needed to serve a rapidly growing enrollment at the community college.

The proposed hike amounts to 2.5 cents on a $10 purchase. Still, officials estimate it would bring in between $6 million and $7 million a year between now and its slated expiration in 2029. That’s more than $100 million the school hopes to spend on assorted projects, notably a new $55 million Allied Health and Workforce Development Building.

Supporters say the improvements would help boost the region's economy for years to come. Critics maintain that the surcharge would hurt an already weak economy, taking money out of people’s pockets precisely when they need it most.

Some have also charged that the timing is designed to minimize voter turnout and that the money won’t necessarily be used for the stated purpose.

Last resort?

A-B Tech President Hank Dunn first pitched the referendum to the Buncombe County commissioners at their annual retreat last December, calling it an "investment in local jobs." In a subsequent letter to County Manager Wanda Greene, Dunn said the money would "expand the capacity of our allied health programs to train employees for one of Western North Carolina's largest employment sectors."

A-B Tech, the letter noted, "needs help from the community, in that we have infrastructure needs. … We think that the community will … understand that a strong community college with a strong infrastructure is important for Western North Carolina."

Dunn found a friendly audience on the Board of Commissioners: K. Ray Bailey worked at the school for 42 years (15 as president), and Carol Peterson serves on the board of trustees. In January, the commissioners unanimously approved placing the measure on the November ballot.

Since then, Dunn and others have been taking their case to voters, highlighting a projected jump in enrollment from 26,000 to 38,000 by 2020. Enrollment is already up, driven by a surge of people seeking training in a challenging job market. Already, notes Dunn, that demand is overwhelming a campus marked by packed classrooms, aging buildings, leaking roofs, antiquated heating-and-cooling systems and insufficient parking.

"You're left with no great time to ask for a tax increase, but you have great need," he observes.

Under state law, county governments are responsible for funding infrastructure improvements, utilities and maintenance at community colleges. Dunn applauds the commissioners for maintaining the school’s roughly $8 million allocation this year despite major budget strains, adding, "Like most places, there's not money in this county for the capital needs that we have."

Raising tuition isn't an option, he explains: The General Assembly sets the rates, which are the same for all the state’s community colleges. And though he’s quick to thank the school's "very generous donors," Dunn jokes, "We haven't found our Bill Gates yet … nobody who's given us $10 million or $20 million at a time."

"This is the thing we were left with," he concludes.

Former Asheville Mayor Lou Bissette, who co-chairs the campaign to get the referendum approved, says: “I don't think we can afford not to pass this referendum. … What we need here more than anything else is jobs, and they're the best avenue I know to finding those jobs."

Poor timing?

Opponents, though, maintain that the harm caused by the added strain at the cash register will outweigh any economic benefits resulting from those capital improvements.

"We fully support A-B Tech and what they do for the community. It's an excellent school, and they provide a good community service," says Henry Mitchell, chair of the Buncombe County Republican Party. "But we're opposed to any tax increase, especially during these hard economic times."

Buncombe Democrats have not yet taken an official stand, local party Chair Emmet Carney reports, noting, "There would seem to be a lot of support within the party.”

Meanwhile, former county GOP Chair Robert Malt has launched a political action committee, the Sales Tax Opposition Partnership, to wage a grass-roots campaign urging voters to reject the measure. "I think raising taxes in the middle of the second Great Depression is not a swift idea,” he explains. “Right now, the last thing we need to do is take money out of the local economy. Retailers, who are most affected by a sales tax, are struggling. We see restaurants and other businesses in Buncombe County struggling and closing."

Several other N.C. counties are holding similar referendums in November (see box, “The Money Hunt”).

Dueling experts

Opinion is also divided on whether the resolution the commissioners approved, which requires that all moneys generated by the tax increase be used for A-B Tech's capital improvements, is really binding.

"What happens if the situation changes and they say, "Well, we intended it, but property values or taxes have gone down and people can't pay, or other problems have happened, or our revenues have gone down and our expenses have gone up — because of extraordinary circumstances, we're going to have to take some or all of that money towards more critical needs?" asks Malt.

Kara Millonzi, assistant professor of public law and government at the UNC School of Government, agrees. "As long as the resolution is in place, they must abide by it, but they can change the resolution at any time," she maintains. "It's very easy."

Under state law, Millonzi notes, counties holding such referendums are not allowed to specify on the ballot what the money would be used for. Instead, voters will simply be asked whether they're for or against a "local sales and use tax at the rate of one-quarter percent (0.25 percent) in addition to all other state and local sales and use taxes."

A September report from the John Locke Foundation, a conservative Raleigh-based think tank, goes further, accusing local officials of misrepresenting the situation. "Promises made by the current county commissioners are not binding on future commissions that would be free to spend the funds on any legal purpose," author Michael Sanera asserts. "Buncombe County commissioners and the president of A-B Tech, Hank Dunn, have joined forces to hoodwink Buncombe County voters."

County Attorney Michael Frue disagrees, saying, "That cannot happen, because they've tied their hands and bound future commissions by that resolution." Besides, he continues, "Once this kicks off,” the county would issue certificates of participation to pay for the improvements; the tax revenues would gradually pay off the COPs. “The bonding companies, like banks, are going to have all kinds of requirements and proofs of what that money's going to be used for," Frue explains. "So once [the COPs are] issued, it's essentially ironclad."

Chris Campbell, the college's attorney, concurs, asserting, "Regardless of how a future commission might feel about it, they're still going to have to pay that.”

Millonzi, however, says, "The sales tax isn't tied to the borrowing in any way, shape or form. … It's a little misleading to say they would have to use the sales-tax money to pay back the borrowed funds, because they would be free to use any other revenue source, including property tax.”

Unlike general-obligation bonds, COPs do not require voter approval. They also carry a higher interest rate, leading some to question why the county isn’t simply holding a bond referendum. Bailey, however, says that would raise property taxes and would thus end up costing county residents more.

An economic engine

Supporters of the measure cite Linamar Corp.’s recent decision to begin operations here as evidence of A-B Tech’s success as an economic driver.

At the June announcement that the auto-parts manufacturer would buy the massive former Volvo plant in Skyland and hire at least 400 workers, Nick Adams, the company's vice president of global sales, called the school one of the best he's seen, saying its willingness to coordinate apprenticeship and internship programs was key to the move.

"Linamar was on our campus multiple times in the months before that announcement, wanting to know, 'Do you have the capacity to do the training? Do you have the machinery, do you have the facilities?'" Dunn reports. The proposed sales-tax revenue, he adds, would ensure that A-B Tech can help lure other manufacturers here in the future.

Kit Cramer, president of the Asheville Area Chamber of Commerce, echoes that sentiment, saying her organization "only endorsed this campaign after putting Hank Dunn through many, many questions.

"We need A-B Tech available for organizations like mine — and the employers we represent — when they need to build skills in order to bring their company here, when people get laid off and need to re-skill in order to find a job," she explains. "There are so many things outside our control in this economy. This is one that's in our control."

Mona Cornwell, A-B Tech's director of community relations and marketing, says the school targets "those middle-skill workers that we hear so much about needing to get the economy back on track." The nursing and dental-hygiene programs, she reports, are particularly popular.

An April study commissioned by the school, notes Cornwell, found that over their working life, graduates holding an associate's degree earn $9,100 more per year than those with only a high-school diploma.

And in the short term, supporters say the measure would pump millions of construction dollars into the local economy.

Dirty politics?

Economic benefits aside, the timing of the vote has emerged as a major point of contention as election season heats up.

"The referendum should be on the ballot during a county election year, not during a municipal election when most county voters won't come out," maintains Mike Fryar, a former Republican candidate for commissioner.

Malt agrees, saying "They did this for political purposes, because they knew the turnout would be higher in Asheville, which is probably going to be proportionally more supportive. I think it's dirty politics; I think it's unethical to schedule a countywide referendum in an off year."

Dunn, however, counters: "That's a specious argument … because the polls are open. Every single resident is entitled and encouraged to vote."

Bailey adds that the commissioners had other considerations when approving the date.

"There's been some discussion that the General Assembly may do away with the opportunity to hold a referendum on a quarter-cent sales tax," he explains. "And that's why you want to go ahead and do it."

Malt also charges that the school has been illegally using taxpayer resources to lobby voters, handing out fliers on campus and posting a link on the school's home page to a website urging people to support the tax increase.

Campbell, however, says those materials as well as faculty's discussion of the issue are all firmly within the law. "The line," he explains, "is between advertising and informational material."

The courts, says Campbell, “have clearly held that if any public entity is going to be affected by something on the ballot, it has the right to produce informational documents so that the citizens and stakeholders understand. It would almost defy common sense to say that if something political affects a governmental entity it doesn't have the right to inform the citizenry about how that would affect that particular institution."

The billboards popping up around town and other overt campaign efforts are being funded by private donations to Join Our Buncombe Solution, a legally registered political action committee, says Campbell. And because no candidates for countywide office are on the ballot, the PAC also agreed to pay for staffing polling places that wouldn’t be open Nov. 8 if not for the referendum.

Those costs are estimated at $80,000, and though Bissette and others associated with the campaign decline to reveal the total amount raised so far (the next fundraising reports are due Oct. 28), he says it's "well over" that amount, noting, "We've been very successful, and that tells me a lot about the support for A-B Tech in this community."

Spreading the cost

Bissette, a former Chamber of Commerce board chair, parts company with fellow Republicans who oppose the increase. "There's a lot of activists out there who are very ideological in some way, and they have very strong beliefs that taxes are not the way," he notes. "But I've come to the conclusion that if our community wants to educate our kids and provide jobs, a quarter-cent sales tax is a way to do it. … I know for a fact that there are an awful lot of Republicans in this community that are supporting this referendum."

Besides, he argues, when the state’s 2009 temporary sales-tax increase expired July 1, the rate county residents pay dropped from 7.75 percent to 6.75 percent. So even if the new increase is approved, taxpayers are "getting a 0.75 percent decrease."

Commissioner Bailey, meanwhile, maintains that while those fractions of a penny would collectively make a big difference to his former employer, they wouldn’t affect local spending habits.

"Did you notice the difference when they sunsetted the 1 percent?” he asks. “I didn't. Will people really notice the difference with the one-quarter of a cent? That's a small amount of money."

The surcharge, he stresses, wouldn’t be levied on key items such as clothing, groceries, medicine and gasoline. The Chamber of Commerce estimates that roughly 30 percent of the additional tax revenue would come from purchases made by people living outside the county. That, says Bailey, is a major reason the commissioners prefer this approach to a bond referendum supported by a property-tax hike.

"This spreads the cost not only to the people in the area but also to people who are visiting," he explains. "We felt like this was a better way and an easier way to do it, and it costs everybody less money."

According to Dunn, the increase would cost the average family of four $40 to $45 per year.

Still, Bissette concedes that it’s not the easiest sell, noting, "Community colleges are at the bottom of the funds ‘food chain.’”

And Malt remains firm in his opposition, calling the tax increase “a flawed mechanism or delivery system. I think that's something everyone should be concerned about, whether they're for or against funding the projects that A-B Tech says they need.”

Bailey, however, says, "I'm confident that the people who have been associated with A-B Tech will come to the polls and vote in favor.” If not, he continues, “It's going to be a terrible day, because I don't know where the money would come from."

— Jake Frankel can be reached at 251-1333, ext. 115, or at jfrankel@mountainx.com.