The Greensboro City Council is spending more money than the City of Greensboro has coming in as revenue.
Since by state law the city’s budget has to balance every year, this might seem to be a problem, however the City Council which was informed of this fact at its annual daylong retreat on Thursday, Jan. 31 at the ACC Hall of Fame in the Greensboro Coliseum, doesn’t appear to be worried.
The budget is balanced by using savings or what in government terms is called a fund balance. Budget and Evaluation Director Larry Davis explained to the City Council that it was not a problem to overspend for a year or two, but added, “generally speaking that is not a sustainable trend.”
From 2014-2015 to 2017-2018 the city’s revenue had an average increase of 2.32 percent a year and the city’s expenditures have increased at a rate of 3.2 percent a year. So the City Council is consistently spending almost 1 percent more than it is taking in.
The figures are a little deceptive because in 2017-2018 the city had a stealth tax increase. It was a revaluation year for Guilford County and the city chose not to lower the tax rate to the revenue neutral rate, but to keep the tax rate the same. The effect was that the city got the benefit of a 2.11 cent tax increase which means the city had about $5.8 million more than it would have without the tax revaluation. Guilford County by comparison lowered taxes tin 2017 by 2.45 cents to keep the rate revenue neutral. State law requires local governments to publicize the revenue neutral rate in a revaluation year, in an effort to prevent cities and counties from stealth tax increases.
But the Greensboro City Council got a lot of help from the News & Record that trumpeted the fact that there was no tax rate increase while all but ignoring the 2.11 cent stealth tax increase.
What that means is that in 2017-2018 the city had a $5.8 million bump in revenue and of course the city received a similar amount in 2018-2019 and is projected to spend more than it takes in this year also.
Some city council’s would be interested in the financial health of the city, the current City Council spent a lot of time during the financial report texting and looking at who knows what on their iPads. Mayor Nancy Vaughan arrived late and missed much of the presentation.
The bottom line on all of this is that the City Council is almost certainly going to raise the property tax rate this year because it wants (not needs) more money to spend and councilmembers don’t face reelection until 2021.
Since the Council won’t want to raise taxes in 2021 the City Council appears to have two options, a significant tax increase this year and no tax increase next year or smaller tax increases both years. The decision will no doubt be made based on political considerations.
Oh, there is a third option the City Council could increase spending only by the amount revenue is increasing and avoid a tax increase but that’s not going to happen.