The Greensboro City Council finally got around to admitting that it is raising taxes this year even though Greensboro currently has the highest tax rate in the state of any comparable city.
At the City Council Budget Work Session on Wednesday, May 31, Councilmember Sharon Hightower asked if Guilford County lowering taxes would affect Greensboro.
The problem with the question is that the proposed Guilford County budget doesn’t actually lower taxes. The proposed county budget has the tax rate set at the revenue-neutral rate, which is the tax rate that raises the same amount of revenue as the current tax rate but is 2.45 cents lower than the current rate because all the property in Guilford County was reevaluated last year.
In North Carolina, cities and counties are required by law to announce what the revenue-neutral rate is after reevaluation so that they can’t slip a tax increase past unsuspecting citizens.
Slipping a 2.11-cent tax increase past unsuspecting citizens, as well as at least one councilmember and one daily newspaper, is exactly what the city has been doing for the past couple of months. The revenue-neutral city tax rate of 61.14 cents has been announced, as is required, but there has been virtually no discussion of what it means, which is a sneaky tax increase that will provide the city with about $5 million in additional revenue. The City Council has talked about keeping the tax rate the same, but in this case not lowering the tax rate means a tax increase.
Councilmember Tony Wilkins made a motion that the city not raise taxes but set the tax rate at the revenue neutral rate of 61.14 cents. Wilkins made the motion but didn’t get a second for a long time.
Councilmember Justin Outling said that he agreed with the idea of keeping the tax rate revenue neutral but said that he thought the taxpayers wanted the city to get moving on the bond projects that will be funded by the $126 million in bonds passed last November. He said not having any idea what the city would cut from the proposed budget made him unable to support the revenue-neutral rate.
Councilmember Marikay Abuzuaiter said that Wilkins should have brought the revenue-neutral rate up earlier. Mayor Nancy Vaughan and Councilmember Nancy Hoffmann both agreed. Wilkins motion was eventually seconded by Councilmember Mike Barber and it failed on a 6-to-2 vote with Barber and Wilkins voting in favor. Councilmember Jamal Fox arrived at the meeting after the vote.
The truth is that the entire budget discussion the City Council had on Wednesday should have held back in February when the City Council was supposed to give City Manager Jim Westmoreland direction on what they expected in the budget.
The answer to the question by Hightower, about what the county sticking with the revenue-neutral rate while the city is effectively raising taxes, is, according to Finance Director Rick Lusk, that the city will receive about $1 million more in sales tax revenue. Fortunately, no one on the City Council picked up that they had an extra $1 million to spend because they didn’t try to spend it.
In the discussion of Guilford County, Vaughan said that there should be a way to charge non-Greensboro residents more for using the libraries, the Cultural Arts Center and parks and recreation facilities.
Barber said that there should be two ticket prices at the Coliseum – one for Greensboro residents and one for non-residents. Vaughan said that might not work with tickets but would certainly work with parking at the Coliseum.
Wilkins said he’d been trying to get some support for that idea for four years.
The funny thing is the people talking about the need to charge non-Greensboro residents more are the only ones who can make the decision to charge non-Greensboro residents more. If the City Council wants to do that, rather than talk about it all it takes is five votes. No motion was made, so no vote was taken, and most likely it won’t be discussed until the City Council gets around to looking at the budget next year.
People in Greensboro do get the shaft because the taxpayers fund parks and recreation and the Coliseum, but everybody uses them. Greensboro residents also pay for the Sheriff’s Department, even though Greensboro has its own Police Department. Greensboro residents pay for the Guilford County Economic Development Alliance twice – once with our city taxes and once with our county taxes. Greensboro pays most of the cost of the library system, although Guilford County does make a contribution. Greensboro residents also pay twice for the Guilford Metro 911 system, which is a joint Greensboro-Guilford County venture.
But the City Council work session wasn’t held to discuss charging fees for non-Greensboro residents or the revenue-neutral tax rate.
The main items on the agenda were the water rate increase and an additional raise for police officers and firefighters. Eventually Vaughan got the City Council back on track. The council agreed to a new water rate fee increase, which raises the rates for Greensboro residents 3.25 percent and non-Greensboro residents 5.5 percent. Westmoreland’s proposed budget had raised the rate for Greensboro residents 3.75 percent and non-residents 1 percent. It was only after the proposed budget was presented that the council informed Westmoreland that they wanted to charge people outside the city more, not less.
It’s the kind of thing that would have been helpful for the city staff to know before developing the budget, but the City Council chose not to talk about the budget until it was presented, leaving the staff to guess at what the council might want. It’s not an efficient way to operate.
The other item fell into the same category. The proposed budget had a 5 percent salary increase for police and fire. The City Council wanted it to be 7.5 percent, so those changes were approved also.
The City Council also said after the budget was passed that it wanted to take a look at all the salaries for city employees.
Fox said he wanted the minimum wage for city employees raised to $15 an hour in this budget, but he didn’t get support for that. The City Council has voted to raise the minimum wage for city employees to $15 an hour by 2020, and that is the schedule the city staff is working on.
Outling has noted that the City Council voted for that minimum wage increase having little idea what the actual cost would be, and it appears the City Council still doesn’t know what the cost will be because so many salaries have to be raised so that supervisors are paid more than the people who work for them, and it goes on up the line.
It wouldn’t be a City Council meeting if someone didn’t come in asking for money and walk out with a big smile on their face. In this case a group of nonprofits who deal with housing and homeless issues want to have a housing hub, which is one building where they all have offices. It will provide one stop shopping for those seeking affordable housing.
They asked the City Council for $250,000 of the $480,000 needed to up fit a building on Summit Avenue for their purposes.
Outling cast the lone no vote against this sudden request for $250,000. Outling asked if they had any figures on how many more people this would help get into affordable housing. The answer was no.
Outling then asked where the money was coming from and was told Community Development Block Grant (CDBG) money. Outling asked what projects weren’t being funded so that this one could be funded and was told none.
He asked if the city simply had $250,000 sitting around in CDBG money and was essentially told yes.
Outling seemed a little dumbfounded by the idea of $250,000 sitting around waiting for someone to come in and ask for it, but he’s serving in his first full term on the City Council. No doubt with time he’ll become more accustomed to city staff being able to find money lying around for anything it wants.
Greensboro doesn’t have hundreds of thousands dollars hidden away in case somebody comes and asks for it, it has millions.
For example, the city keeps 9 percent of its budget in its unallocated fund balance, which is a fancy word for a savings account. The North Carolina Local Government Commission recommends that a city have a minimum of 8 percent and it is only a recommendation, not a requirement. So that’s about $5 million that could be spent without falling below the recommended minimum.
The city also has about $10.2 million in a Capital Reserve Account, which was set up in the 1980s by some city councilmembers to hide money from other city councilmembers who wanted to spend all the money the city had. The City Council could spend this $10.2 million any time it so desires.
In fiscal year 2015-2016, the city ended the year with $4.3 million more in revenue than had been projected in the budget and the spending was $9.4 million less than had been projected. That means at the beginning of the current fiscal year the city had $13.7 more in the bank than it had anticipated.
When you start talking $10.2 million in one account and $13.7 million in another account, after a while you’re talking some real money.