Budget wrangling: Asheville property tax hike no longer taboo among Council members

For years, even in the midst of city budget shortfalls, one measure has stayed off the table: a property tax hike. But on May 22, several Council members voted for an increase that would have funded a pay raise for Asheville firefighters and police; the proposal failed by a single vote. The raise and tax increase remain under serious consideration as the city tries to resolve its budget concerns in a special work session Tuesday, June 5.

In the past decade, most Council members have emphasized the goal to “hold the line” on property taxes or keep the rates “revenue neutral.” The city tax rate remains at 42 cents per $100. Property taxes are one of the only revenue streams the city has full control over: Sales taxes are distributed to the city by the county, and other options — like a hotel tax — require approval from the North Carolina Legislature.

There have been exceptions. After taking office in 2009, Council member Cecil Bothwell endorsed a property tax increase, claiming it’s one of the more equitable ways to raise revenue for ever-increasing needs. But he’s remained mostly alone in that proposal.

On May 22, however, police and firefighters showed up in force to demand a 3 percent instead of the 1 percent cost-of-living raise proposed in the budget. Add that request to a public that seems to want better sidewalks, street cleaning, transit and other services that strain the city coffers.

At a particularly tense point in the discussions that evening, Council member Chris Pelly proposed a 1 cent per $100 property tax hike to pay for the bigger raise.

Bothwell had earlier noted, “I think it’s the realistic thing to tell the people of this city: If you want it, you have to pay for it.” He claimed that in his time on Council, he hadn’t heard complaints about possible property tax increases.

Mayor Terry Bellamy joined Pelly and Bothwell in voting for the increase, which failed by one vote. Ironically, Bellamy bragged in her recent unsuccessful congressional campaign that “she fought against property-tax increases and found other ways to cut spending.” (She has not responded to requests from Xpress to speak further about her views on taxes and the budget.)

Among opponents on Council, a major reason cited was the lack of prior public notice about the move, rather than the nature of the tax increase itself. And Council member Jan Davis initially seconded Pelly’s motion, but later withdrew his support, citing concerns about the need for more consideration of such a major step.

Asked about the vote later, Davis says, “Property tax has been off the table for 10 years. But when you hear a whole community wanting certain things, there comes a time when you have to pay for them, and we have a limited way of doing that. There are certain things you have to do.”

Nonetheless, an increase should be a last resort, he adds. “But I don’t see how we get a substantially larger increase for our employees without a tax increase. Staff’s going to have to come up with something fairly creative.”

Pelly says that various infrastructure “projects still need to get done, and we’d have to go back to them next year. I thought we needed to get a dedicated funding source to do this pay raise.” He notes, “The tax rate for city owners has not increased in 10 years. When you look at everything else that’s gone up in 10 years, it’s a relatively small increase that enables us to meet the needs of city employees.”

With city police and firefighters having lower salaries than many comparable areas, raises can help retain them. High turnover “ultimately means the taxpayer has to pay more money because we have to train new people,” he adds. “I think it’s the one solution that allows us to go forward with the capital improvements we need to do for the city,” though he says he’s open to other options to get to his goal of a 3 precent raise for city employees.

But each 1 percent raise costs about $500,000. Vice Mayor Esther Manheimer, who chairs Council’s Finance Committee, says, “We can go to 2 percent, but past that, if you were to try to get another 2 percent raise out of the budget as it stands right now, without a property tax increase, you would need to cut very deeply into capital projects.” She continues, “Since I’ve been on Council, we’ve put in place a long-term plan to deal with greenways, sidewalks, etc. I don’t want to derail that.”

Council member Gordon Smith says the city needs to develop a plan to get city employees up to the state average in pay, but “there’s some economic realities in front of us, and we might not be able to recover raises fully from the recession yet. We’re just starting to see some recovery.

“We will pass a budget. It will be balanced. We will get there.”

“There are distinct tradeoffs with any route we take here, but it’s our job to make difficult decisions,” Council member Marc Hunt tells Xpress. “Our property taxpayers are burdened with funding services for lots of people that come here from out of the city. These are welcome visitors; they add a lot. But Asheville is very constrained in its opportunities to fund operations. From that standpoint, to raise property taxes seems very unfortunate.”

“I’m not closed to the idea of more taxes on our citizens,” Hunt adds. “But I’d like to more collaboration with local governments throughout the region to provide services for the region.”

Council will wrangle with all these options tomorrow, June 5. The work session begins at 3:30 p.m. on the first floor of City Hall.