Inside Asheville’s “What if” budget

The perfect storm of revenue overhauls in Raleigh, a property revaluation and a major reorganization of city departments make this year’s $143.9 million city of Asheville budget complicated, to say the least.

Here’s some important things to know before the public hearing at tonight’s Asheville City Council meeting:

It has several different scenarios

Right now, the two chambers of the general assembly are wrangling over which budget plan they’ll adopt. Uncertain how things are going to shake out, the city budget anticipates a roughly $1 million loss from a revenue overhaul that would increase their sales tax revenues but eliminate utility franchise fees and other sources of cash for local governments. The city’s also lost the ability to spend a share of its water revenue on related infrastructure improvements. The proposed budget makes up for this by freezing $500,000 worth of vacant positions, implementing minor departmental cuts and delaying a number of infrastructure projects until the next fiscal year.

That sort of “freeze and delay” approach has been pretty common since the economic downturn as a way to deal with whatever curveball is thrown the city’s way. What’s different this year is two pieces of state legislation: the law to take the city’s water system (passed but currently tied up in court), and a bill allowing the city to form a joint parks and recreation authority with Buncombe County (currently sitting quietly in the state Senate).

Losing the water system could cost the city at least $1 million this coming fiscal year, and getting the recreation authority would save it $2.5 million. For purposes of the budget, the city council opted to assume that the city keeps the water system for a while longer and gets the parks and recreation authority by January. If the city loses the water system in the meantime, it will use money from the rainy-day fund to make up the loss. If it doesn’t get the recreation authority, it faces the prospect of “hard choices,” in the words of some staff and council members, to make up the loss come January.

If the city does get the recreation authority, it plans to leverage the savings to take out more debt for an economic development fund that would go to everything from infrastructure in the River Arts District to improvements to the Asheville Art Museum. A longtime priority of senior staff, the city would have to raise taxes or abandon the idea if the recreation authority bill doesn’t pass the state legislature.

What’s the deal with that tax hike?

The budget proposes increasing the city’s property tax rate from 42 cents per $100 of value to 43 cents. Further, it claims this is the “revenue neutral” rate, i.e. what the city has to charge to take in the same amount of revenue (plus growth) as it did the year before.

But Asheville’s property values, according to earlier reports from the Buncombe County Tax Assessor’s office, increased (by 2 percent), which usually means that the revenue neutral rate is lower than before. So why is it higher?

According to city staff, a lot of property owners appealed the revaluation, wiping out that increase and then some, reducing the projected property values by 2.17 percent. Combine that with sluggish construction growth in the past year, and staff claim that the hike is necessary to keep the city coffers roughly where they were last year.

The reshuffle

As if all that wasn’t enough, the city underwent a major reorganization this year, shuffling around duties and creating a new General Services department.

If you’re reading the budget, you’ll notice there are cuts to several divisions and sharp increases in others. In many cases, these aren’t cuts in service, but moving something to a different department. For example, while Environment and Transportation shows a decrease, that’s largely due to transferring the city’s vehicle fleet maintenance to the new department. Transit services remain roughly where they are, budget-wise: no decreases, but also no increases like Sunday service.

An increase that isn’t part of the reshuffle, however, is a 3 percent raise for all city staff. That especially increases the budgets of big departments like Public Safety, which accounts for 47 percent of the city’s general fund by itself.
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Of course, it’s still a matter of debate whether this is the fiscal direction Asheville should be pursuing. If you want to weigh in, Asheville City Council meets Tuesday, June 11, at 5 p.m. on the second floor of City Hall.