AvlBudget

Wading through the Asheville budget

by David Forbes June 11, 2014

By David Forbes

The city of Asheville is on course to spend $147 million. That’s the amount of its annual budget, covering everything from parks to public art to smartphones for cops.

Except for us urban policy masochists, the words “city budget” don’t usually make people run to pour over the document with interest (though there’s a handy tool from Code for Asheville that makes wading through this year’s budget easier).

While it doesn’t usually get the same packed-house-and-people-shouting attention as battles over subsidies, new ordinances or the latest rezoning fracas, the budget’s where the lion’s share of the city’s priorities for the year are determined. Major projects, spending, service cuts (or increases), pay hikes (or not) all come down to one vote in late June, and one that usually flies under the radar.

Last year was an exception, with the budget one of the biggest, most fought-over issues of 2013. City government held multiple public input sessions and publicly scrapped with the GOP-controlled state legislature over the effect their “reforms” would have on the city coffers. In the end, Council passed the city’s first major tax increase in over a decade, slated to fund a number of “aspirational” projects that proponents claimed would generate more economic growth. One of those — a promise of $2 million for renovations to the Asheville Art Museum — caused even more controversy.

So far, this year has significantly less turmoil and barring some last-minute upheaval, the budget seems likely to pass without too much ruckus. At Council’s public comment session on the budget last night, the biggest push was on the need for more sidewalks.

While the legislature just passed a business privilege tax overhaul that would slash $1 million from the city budget (for the very tangled tale of that change, read this Citizen-Times piece), it won’t hit until next year. The city just won its first round with Raleigh on keeping the water system, a fight that will be tied up in appeals for some time.

But the relative lack of shouting matches doesn’t mean that this year’s budget is without its important pieces. This is $147 million, after all, and what it does (and doesn’t) go to is pretty damn key to how the city’s run in the coming year.

Nonetheless, the budget can still be a pretty arcane document, even the city manager’s summary, touting the “optimization of limited resources,” is written in fairly technocratic language. So the following is a rundown of major points about the city budget, what’s changing and what’s not — and some context on how the city got to its current situation.

Where’s all this money come from?

Property taxes, usually. That’s historically the biggest source of cash for the city and the only tax state law lets the city raise (or lower) without having to go to the legislature in Raleigh for permission. Last year, the city increased the tax for the first time in awhile, in order to fund the aforementioned “aspirations.” The hike’s staying in place this year: property owners in Asheville will pay 46 cents for every $100 of property value, bringing in an estimated $52.1 million, .9 percent more than last year.

Both before and during the economic downturn, Council’s historically been loath to raise this tax. Only a small percentage of voters turn out for municipal elections, after all, and as homeowners vote at considerably higher rates than renters, such an action can be politically risky.

But while last year’s increase became something of an issue in the following Council election, current Council members (and new member Gwen Wisler, who endorsed many of their policies) cruised to victory, something they interpreted as a public endorsement that they were on the right course.

The other big chunk of cash comes from fees for things like water or parking, though many of those go right back around to maintain or expand the systems (water is the largest) that generate them.

Some other revenue ($18.7 million) comes in from the share of state sales tax the city receives. This number is very closely tied to economic growth, and can fluctuate sharply. City staff are estimating a 3.4 percent increase in sales tax revenue in the coming year.

North Carolina, a “mother, may I?” state to use the term of policy wonks and municipal staffers, gives cities very little authority to raise taxes and revenues on their own. Almost everything that’s not a fee or property tax requires specific state approval. While there’s been some talk over the years of raising a hotel or food and beverage tax to generate more cash for city coffers from all those tourists coming into town, such efforts have failed to gain any substantial traction, and there’s nothing on the horizon.

Even on the fee front Raleigh can, from the view of municipalities, throw a major wrench in the works. The city collects business privilege licenses and uses a formula that charges large retailers and businesses at a much higher rate than Asheville’s much-ballyhooed small businesses. But while the new shift from the state would mean the city would lose over $1 million in revenue a year, that won’t show up until next year.

In the meantime, after all of last year’s excitement, Council’s not about to raise taxes again. Initially, it looks like this year’s budget is actually less than the last. However, last year the city was finishing off a number of large infrastructure projects. Accounting for that, the city will actually spend 4.6 percent more than last year.

Preparing for a rainy day

Ashevilleans, especially in the last few years, are no strangers to rain. We get a lot of it, to the point where it can quickly become an issue. In the past few years, Asheville’s seen several high profile problems with landslides and erosion, from North Asheville to the Five Points.

Blame it on climate change or inadequate infrastructure, but the record-breaking rains last year showed how vulnerable Asheville’s scenic hills can be to flash floods and erosion.

That’s where the biggest fee change this year comes in, as the city’s overhauling the way it deals with stormwater, charging owners of larger buildings with more impervious surfaces (parking lots and the like) more so that it can hire a maintenance crew, install more drainage and have more funds to study the impacts of local flooding. The new fee set-up will raise around $4.8 million, compared to $2.7 million last year.

Raise time

Payroll, for everyone from City Manager Gary Jackson (over $168,000 a year) to a seasonal parks and rec laborer ($10.48 an hour) makes up 64 percent of the city’s budget. In the coming year Asheville will employ 1,142 full time workers.

During the recession, personnel was also where Jackson and the budget crew went each year, freezing pay, leaving vacant positions vacant and trimming training time, in an effort to avoid layoffs or a serious reduction in services. But after three years of frozen wages, some employees had enough. In 2012, police and firefighters packed Council chambers, backed by their powerful organizations, to demand a higher raise. They didn’t get all of what they wanted, but every year since, pay raises for staff have been front and center. That’s easier to do now that the economy’s staggered back enough for revenues to perk up. This year, there’s a three percent hike — totaling $1.9 million — for all city employees, as well as the unfreezing of positions in many departments due to the economic thaw.

Then there’s the “police strategic plan” including smartphones for all officers ($187,000) and both body and car cameras for patrol officers ($85,000). That’s not the only boost the police are getting. A cool $3 million is going to replace or upgrade the city’s aging vehicle fleet, and Asheville’s cops will now be able to take their vehicle home.

More importantly, in the future this annual question might not be one at all. Senior city staff have been weighing ways to overhaul compensation for city employees, and tucked in a document answering Council’s questions about the initial budget presentation, there’s a mention that the city might shift to an automatic pay hike for city employees every year, tied to the increasing cost of living.

Roads and RAD

Remember that part about property taxes? With attempts to gain approval for more taxes from the state dead in the water and expansion of the city’s borders essentially banned due to 2011′s state laws sharply limiting annexation, attention from Council has shifted to how to generate more development within city limits, and thus higher property values and more tax revenue. At their 2013 retreat, Council and staff decided to pursue a strategy of “return on investment,” focusing on chucking major funds into projects only if they believe it could create more economic growth in the future. The long-running Bele Chere festival was an early casualty of this shift.

In the view of Council and city staff, this approach is based on Asheville’s success, as the reviving downtown gave city coffers a major boost over the past 20 years. So extending such growth to the River Arts District, South Slope and West Asheville appeals to Council as a way out of its cash-strapped state. The approach has even been touted nationally, though at the same time it’s led to greater economic growth, Asheville’s also become rapidly less affordable, posing another set of challenges.

At the same time, infrastructure to support such a revival in an area is expensive, and getting the funds for dealing with Asheville’s aging systems has been a major challenge. Asheville’s population has increased at a rapid pace since the ’90s, and the rate of the increase hasn’t left local government much time or resources to gradually improve its roads, sidewalks and other infrastructure to deal with the shift. That means that increasingly populous neighborhoods often don’t have adequate sidewalks, for example, something that a number of speakers last night criticized Council for.

Tourism traffic also means city streets see a level of wear and tear equal to a city of a good deal larger size, but — remember that part about the reliance on property taxes — with less tax base to pay for improvements.

So in the coming five years, the city plans to spend $132 million on these big brick and mortar matters; “capital improvements” in budget language. About $90 million of that is city funds, including both loans and cash, especially the RADTIP overhaul in the River District.

Of course, New Belgium brewing is a big part of this, as improving infrastructure near the future brewery was a major part of the deal to bring Big Beer here in the first place.

This time, there actually seems to be rare comity on the effort to get federal funds for RADTIP, and Asheville’s Democratic Council has support from Republican Reps. Patrick McHenry and Mark Meadows.

The budget also devotes a considerable amount ($300,000) to “aggressively remove graffiti” during the height of this summer’s tourist season and the same amount to clean sidewalks downtown; both major complaints of business owners who’ve given Council an earful on the issue.

Steps towards transportation equality?

Bus transit isn’t getting quite as big of a boost as city employees, but it’s still getting a bump in services that’s long been a desire of transit advocates: now $220,000 will go to provide limited bus service on Sunday, starting in January. A federal grant ($80,000) will partly offset the cost, and last night a number of people praised the change.

Earlier this year, a group of transportation riders, the People’s Voice for Transportation Equality, backed by local non-profits, gathered together to present a 19-point list of reforms to city government. The lack of these changes, they asserted, leads to lost jobs and leaves Asheville’s working class and low-income populations in an increasingly precarious position as they try to make ends meet.

So the buses will finally run on Sunday. However, other major demands, like late night service, aren’t in the cards in this year’s budget.

Further, transit depends on a mix of local, state and federal funds, and budget changes on any of those fronts can have a major effect. In this case, the city’s anticipating less money from the state in the coming year, meaning the city has to increase its contribution to make up the loss. Turning the agenda for transportation equality into a reality will require more resources and a shakeup in the way the city orders its boards, among other things. Right now, it looks like that, along with many other issues Asheville’s facing, will be a multi-year haul.