As City Council members sat down this week for a two-day strategic retreat to chart their legislative goals for the year, word came that the city’s financial fortunes appeared to be retreating as well.
While not dire, city Chief Financial Officer Ben Durant told Council members the city could expect a budget shortfall of $1.3 million in the next fiscal year, which begins July 1.
While budget deliberations won’t begin in earnest for a few more months, Council members made it clear that they would find ways to make up the deficit without raising taxes.
Durant noted that in the next fiscal year, benefit costs were projected to increase 10 percent, thanks largely to increased health costs, while salary costs could rise by more than 7 percent caused largely by new positions added last year and a market-based pay-plan adjustment. That adjustment, now in its third year, would tack on $450,000 in supplemental salary costs from raises and cost-of-living increases, Durant said.
While increased costs are part of the problem, Durant noted that a decreased growth in revenues also played a prominent role. After years of healthy growth in the city’s property-tax base, the city’s property-tax revenues are expected to increase by just 2.5 percent in fiscal 2008, versus 5.5 percent in fiscal 2006. The projected figure also is significantly below the 10-year average of 3.4 percent annualized growth. So far, in the current fiscal year, tax growth has grown by just 2.3 percent — the lowest in a decade, Durant said.
In addition to slower growth in property taxes, Durant also projected a downturn in sales-tax growth. Compared to 8 percent growth last year, growth has slowed to just 1 percent in the current fiscal year with a projected growth of just 3 percent in fiscal 2008.
The culprits behind the depressed growth are the current housing downturn, a tightened consumer-credit market and a general economic dip exacerbated by higher energy costs.
The budget forecast not only served as glum news to start the new year, it also colored the main reason behind the Council retreat — to set goals and priorities for the coming year. While every member came armed with wish lists that would cost money, the Council agreed to six goals that Council member Holly Jones noted, half-jokingly, “don’t cost us anything” — at least for now.
Those goals include focusing on: public safety, not only in regards to police and fire protection, but also issues regarding the general public health, safety and welfare of citizens; improving intergovernmental relations with county, state and federal elected officials, especially in regard to settling the current water dispute with Buncombe County; pledging to become a leader in clean energy and environmental sustainability in the Southeast; tackling regional growth-management issues; holding the line on taxes and exploring possible tax-relief measures; and developing a comprehensive infrastructure-needs plan for the city.
With those six broad goals, Council and staff pledged they would spend the next year formulating the particular legislative and policy measures necessary to meet them. To help facilitate that process, the Council also agreed at its retreat to begin holding monthly work sessions in place of a regular meeting where formal action is taken. The Council discontinued such sessions last year, but agreed to resume them on the third Tuesday of each month. With a full plate of issues confronting them, and new Council member Bill Russell working to get up to speed, Council members suggested that resuming work sessions would be in their and the public’s best interest.
For a full report on the City Council retreat, check out the Feb. 13 issue of Xpress.
— Hal L. Millard, staff writer