Local government’s biggest — and most underrated — public hearing of the year happens tomorrow. Inside the city’s $154 million budget, from tax hikes to living wage, why it matters and what it means
Above: City Hall under renovation, photo by Bill Rhodes.
It’s easy, for those watching the goings-on in City Hall, to get tied down in single political fights here or there. Does this development or incentive pass? But much of what the city of Asheville does each year doesn’t get its own separate vote. Instead, it comes in the form of the annual budget. This document gets fleshed out in everything from Council’s early year retreat to budget sessions to staff meetings before it makes its way to Asheville City Council for a presentation and then to the public for a hearing. Finally, the cash and priorities for everything from the bus system to the police department to what the city does (or doesn’t) pay the concessionaires at the Civic Center, come down for a single vote in late June.
So it’s worth delving into exactly what’s behind that budget and where the $154 million (up from $147 million last year) the city plans to spend in the coming year is going. In addition to this analysis, if you want an excellent tool to help navigate the budget, here’s an invaluable interactive look from DemocracyApps, with the help of Code for Asheville and the Asheville Coders League.
The public hearing on the budget takes place early in Council’s meeting tomorrow, at 5 p.m. in City Hall. Council’s vote on the matter will come two weeks later, on June 23.
Cash flow
But first, where does all this money come from? In North Carolina, a “mother may I?” state in the lingo of political scientists and city planners, there are only a few levers of revenue — though some considerable ones — that cities can use or raise as their elected officials wish without going to the state legislature first.
The main one are property taxes, which the city levies on every plot of land (or car) within its borders. The other are the fees the city charges for services, everything from water to parades.
This year, city government’s using both to try to make ends meet and reach its goals. First, the budget has a tax hike of 1.5 cents per $100 of property value, bringing the city’s total tax up to 47.5 cents per $100. In the coming year, the city estimates to bring in a total of $1.5 million this way, which it plans to use to fill a gap left by the state revoking the city’s ability to charge local privilege license fees. Total, the budget anticipates $54.8 million from property taxes.
Property tax hikes used to be somewhat verboten in city politics, but as the recession cleared up and Council had a number of priorities that are hard to meet without additional funding, that ended with the passage of a four cent hike in 2013. If any doubt remained about this step, the fact that incumbent Council members (and a new member, Gwen Wisler, who supported many of their policies) won by considerable margins in that year’s elections confirmed that the city’s elected leaders could potentially pass a tax increase and still stay in office just fine.
The other main cash source, fees (bringing in a total of $54.4 million) are also seeing plenty of increases. In many cases, fees go into separate funds that are turned right back around into a certain service, like the water system.
But as Asheville’s in the middle of a tourism and building boom the money the city rakes in from development fees have shot up considerably — 35 percent last year — as developers pursue more hotels, large apartment complexes and commercial development. That source of income is notoriously fickle depending on the larger economy, it nearly dried up during the downturn, but for now the city’s getting some considerable revenue from it and anticipates $900,000 more in the coming year.
The city also hiked stormwater fees, part of an effort to improve infrastructure and avoid landslides like those that happened a few years ago. These fees will help fund the hiring of a six-person stormwater crew.
But the budget’s not assuming that will be nearly enough. So fees for everything from block parties to garbage have gone up. The trash fee, in particular, is set to rise by 50 percent, from $7 to $10.50 a month, which will mean $42 more a year from each Asheville household that uses the service.
This isn’t coincidence. It must be remembered that plenty of the politics behind a budget come not just from the Council dais, but also from the city’s senior staff. In this case, they’ve adopted, with the assent of several Councils, a philosophy of “full cost recovery.” That means that, whenever possible, they try to fully pay for a service with the fee they charge rather than subsidizing it through the city’s general fund. So instead of charging a nominal fee and using tax dollars to support services, staff are upping the fees to get as much as possible back directly from the people using the service.
According to the guidelines for such increases, staff are also supposed to weigh the public good and the burden imposed by such fee hikes when they’re crafting them.
But “full cost recovery,” if applied more broadly and aggressively, could start putting more of the burden on Asheville’s citizens directly. Given the state of wages in Asheville this approach may cause controversy in the future. If, as there’s been some indication, it’s eventually extended to things like bus fees that will hit working-class and low-income populations harder, expect the public to be a lot more concerned about this particular part of the budget, though this year, there might not be too much furor.
The city also receives some sales tax revenue from the state, though due to the way that’s distributed it’s a small percentage compared to the amount of commercial activity generated within Asheville. This too, was the possible target of state legislation changing the formula for redistributing sales taxes, which would have cost the city another $4 million. So far, however, that bill is stuck in committee. The budget anticipates $20 million from the city’s share of sales taxes in the coming year.
Staffing up
Pay and benefits are a huge part of Asheville’s budget. In fact, they take up most of it, as the city employs over 1,200 people, everyone from City Manager Gary Jackson (at a cost of $168,000 a year salary) to $10.48 an hour (for now) for a parks and rec laborer, with total salaries and benefits tallying $82 million.
During the recession and for years after, the city balanced the budget and avoided major tax hikes by chopped vacant positions, froze salaries, halted significant raises and cut training time.
“Unfortunately, while these tactics allowed the city to weather the economic storm, they did not come without consequences,” Jackson writes in his introduction to the budget. “The city fell behind in capital maintenance and investment, employee compensation fell behind market and current staffing levels are inadequate to maintain a high level of service.”
Meanwhile, the city grew considerably. So to meet this, staff feel like it’s time for more of a thaw and less of a freeze. Specifically, the new budget adds the equivalent of about 36 full-time jobs. Some of these were added during the past budget year to meet rising needs. This includes the new stormwater crew, more fire inspectors, more police administrators
Another part of the thaw in staffing took the form of a $200,000 “classification and compensation” study, where the city paid the Segal Waters consulting firm to assess whether its pay was competitive. The result is a change in pay scales, especially in areas like police and fire along with an end to pay freezes. In addition, the city’s also giving all of its employees a one percent cost of living increase. When all is said and done, that totals means $1.65 million more in the current budget to pay city staff.
About that living wage
Additionally, which employees the city pays a living wage to is also a topic of some controversy. The city adopted a living wage policy in 2007 and updated it in 2013. A living wage is $12.50 an hour for a worker without health insurance or $11 an hour for one with and it’s calculated as the amount an Ashevillian needs to make ends meet without public or private assistance. Ostensibly, the city pays its full and part-time employees a living wage.
But importantly, the policy exempted any workers the city categorized as “temporary or seasonal.”
Late last year, a Blade investigation revealed that at least 140 of those workers were paid below a living wage, in some cases well below. It also showed that despite the name of the category, all city workers who worked 20 hours or less a week were designated as “temporary or seasonal,” even those who had been with the city for decades or worked consistent hours throughout the year.
Early this year, a majority of Council asserted that it was time to change this, with some claiming that the goal was to get all city employees up to a living wage. Indeed, the budget designates $250,000 for this purpose, noting “the inclusion of funding to pay all temporary/seasonal staff a living wage.”
But the city manager’s introduction to the budget also declares that staff are evaluating the matter further, and what’s happened at meetings during the course of May reveal that they’re doing so in a way that will likely mean that some city workers still remain below a living wage.
At a budget work session on May 12 Linda Wishard, the consultant the conduct the compensation study, opposed the idea of paying a living wage to all city workers, warning “it would falsely inflate your position in the marketplace.”
Jackson likewise expressed reservations, and promised to “sharpen our pencils,” indicating that senior staff would divide the current pool of “temporary and seasonal workers” into those it feel merit a raise to a living wage and those it planned to leave out of such an increase.
In ensuing remarks before Council at its May 28 meeting Chief Financial Officer Barbara Whitehorn confirmed this was the case.
“You all directed staff to look at our temporary, seasonal and part-time seasonal employees and determine which of those jobs should be at a living wage and which are truly temporary positions,” she said at the time. “So that’s our goal.”
The next day, in response to an email from the Blade, Whitehorn again verified that the point of the city’s “pencil sharpening” was to give some employees within that category a raise to a living wage, but leave out those who senior staff consider “truly temporary.”
That means that while the city’s ostensibly putting all its employees up to $12.50, staff currently plan to leave some workers out of such an increase, though Whitehorn also clarified in her email that they haven’t yet determined which ones they’ll place into the “truly temporary” category. The results, however, could see Civic Center workers, for example, receiving a raise, but lifeguards remain below a living wage.
Placing bets
One of the reasons for the city’s property tax expansion in 2013 was “aspirational” wish list and this budget likewise plans to put millions into infrastructure and economic development.
This year, along with staffing increases, this is the major area where the city’s putting additional revenue, rather than expanded services (like, for example, the addition of Sunday bus service in last year’s budget). This year’s budget, in staff’s own words, “is primarily a continuation budget with essentially no new services or program expansions.”
The city has a lot of challenges to deal with and both Council and staff believe investments in infrastructure and economic development might solve some of them. The lack of affordable housing has reached crisis levels, low pay leaves the economy on shaky ground. Because of its nature as both a tourist town and regional hub, Asheville has the highest ratio between its daytime/nighttime population in the state.
That means that many people using the city’s services aren’t paying those property taxes that, as noted, above, give the city the lion’s share of its revenue. Solving that has been a major priority of city staff and successive Councils for over a decade. On top of all that, Asheville’s rapid growth during the 90s and early 2000s meant that an increasing population often has to use aging infrastructure, with Jackson at one point in the budget introduction estimating the city’s needs at $400 million. To deal with that issue, staff and Council are trying to prioritize certain areas and projects while seeking to find ways to get outside grants and loans.
Here too a larger debate about the direction of the city is playing out. Mayor Esther Manheimer, as she laid out in last year’s “state of the city” speech, believes in putting city funds into “innovation districts” in hopes of spurring downtown-like growth that will enrich the city’s coffers by developing areas the River Arts District, Charlotte Street and South Slope, for starters.
This approach has its own dose of controversy, of course, as evidenced in some of the responses to Manheimer’s speech that the Blade rounded up, especially from those who feel it might neglect less trendy and gentrifying areas of town in favor of catering to developers and tourists. It also represents a focus towards more specific areas, rather than broader measures like an infrastructure bond referendum that were being discussed as recently as the 2013 election.
But it’s also one the city’s been able to leverage considerable funds for, specifically $14.6 million in federal grants for the River Arts District. As Manheimer said in a defense of the policy versus a bond referendum, “this is actually going to get done. That’s a distinct advantage.” Over the next budget year, $8 million is set to go into overhauling infrastructure in that area, a project known as RADTIP.
The city’s also putting $508,333 into economic development this year to companies for building in the area. While incentives for this have occasionally proved controversial, city leaders also tout Linamar’s auto parts plant or the New Belgium brewery as examples of their effective use to attract major industries with better-paying jobs. Indeed, the increase in funds this year is due to paying out the incentives promised earlier to those two companies.
Funds are also going to increase the city’s contribution towards the Chamber of Commerce-run Economic Development Coalition, hiking its annual contribution from $60,000 to $100,000 “in order to support the city’s investment in Innovation Districts and job creation in our improving economy,” Jackson wrote.
Meanwhile, the city’s contribution to the Affordable Housing trust fund is remaining the same, at $500,000 a year, while a total of $4.5 million is set to go to affordable housing priorities, primarily the Eagle Market Street project and moving the city’s parks and recreation maintenance facility to free up its current site for future affordable housing development.
Dollars and sense
Overall, the budget reflects where Council and staff have shaken out on the priorities for the city’s tax dollars: more (and better paid) staff, a focus on economic development and pouring funds into “innovation districts” while not expanding current services and raising fees to try to get more money back.
Of course past all the number-crunching this is the heart of politics: where resources are spent, and in whose interest. If you have any questions for the people that wrote this budget — or want them to change some aspect of it — show up at City Hall tomorrow night.
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