The City of Greensboro may start giving preference to businesses located in Guilford County when awarding certain contracts.
The plan is the brainchild of City Councilmembers Justin Outling and Tammi Thurm. When they suggested at the City Council’s afternoon work session on Tuesday, March 20 that the City Council consider the local preference policy, they were attacked by Councilmembers Sharon Hightower and Goldie Wells.
Outling said he had made the suggestion several times and had been told that state law prevented cities from giving a preference in awarding contracts to local companies. However, Outling, who is an attorney with Brooks Pierce, decided to look into it himself and went to the University of North Carolina School of Government for assistance.
Outling said that they came up with a policy that did not violate state law but did allow the city to give preference to local companies.
The exact nature of the fierce opposition to giving local firms a preference in contracts under $30,000 and in the request for qualifications (RFQ) for service contracts was a little unclear. But it was based on the belief that the city hadn’t done everything that it had promised for Minority and Women-owned Business Enterprises (MWBE).
The policy is fairly simple: In contracts under $30,000, if the lowest responsible bidder is not from Guilford County and the second lowest bidder is within 10 percent of the low bid and is local, the local company will be offered the opportunity to match the price of the lowest bidder. If the local bidder turns down the offer to match the price then the contract goes to the non-local low bidder.
In the RFQs, which are scored on a point system, the local company would receive a 5 percent increase in points for being local.
Outling tried to separate the local preference issue from the MWBE program, but Wells insisted on reading a long passage about the MWBE program that she said the city had not done.
City Manager Jim Westmoreland was sitting at the table in front of the dais, but nobody asked him if the city had followed the policy of granting contracts below $30,000 to MWBE contractors, and if not, why not. It appeared that speaking in loud voices about not supporting MWBE contractors was enough.
Outling tried to point out that the MWBE contracts were a different issue, and Hightower said that the city had received the disparity study on which the new MWBE program would be based and said, “I find it interesting that this policy is coming out and being discussed with the disparity study work session coming up.”
Hightower also said, “Focusing on this limited-to-under-$30,000 contract is suspect in itself. There is something about this that just is not right.”
Outling had explained that because of state law the city could only use local preference in contracts of less than $30,000.
Outling agreed that the issue of MWBEs was a top priority for the City Council.
Councilmember Marikay Abuzuaiter added, “The unanimous top priority.”
She added that most of the MWBE contractors were local businesses.
Councilmember Michelle Kennedy tried to tone down the heated discussion by pointing out that no one was disagreeing with the RFQ portion of the plan and asked if they all couldn’t agree to that portion and discuss the $30,000 contract part later.
Outling asked, “Are you telling people that you support local or are you actually supporting local. It’s time to show up or shut up.”
Outling doesn’t get distracted and said that the only purpose of the work session was to familiarize councilmembers with the policy before it was placed on the agenda for the April 19 meeting. In the end, Outling got a consensus of the council to place the item on the agenda. Whether he will have five votes for the local preference policy at that meeting is another question.
The City Council also heard a report on the current status of the budget, where revenue is running about $3.1 million behind expenses. At the City Council retreat in February, revenue was about $4 million less than expenses, so the gap is narrowing.
Budget Director Larry Davis said that one cause of the gap was that there had been “quite a few additional council priorities.” This is city-speak for the City Council has spent a bunch of money that wasn’t in the original budget. If you add new expenses and don’t add new revenue, the budget isn’t going to balance.
It’s not as big of a problem as it may sound. If the year ends without the gap closing, the city will have to spend more money from its fund balance, or savings account, than it would like.
But the City Council chose to give a salary increase to police officers and firefighters earlier than was planned, it asked the city to speed up the implementation of the $15 an hour minimum wage for all city employees, and it decided that the city, not its employees, would cover the 9 percent increase in healthcare insurance, just to name a few council priorities.
Also, some revenue is low, such as the utility sales tax that is down by about $1 million. Davis said this was a statewide problem and nobody seemed to have a good explanation for why the utility sales tax revenue was down this year.
The city had used $7.2 million of the fund balance in the budget estimates and it appears that the city will spend about $3.1 of that money. In past years the city has underestimated revenue and overestimated expenses, so the fund balance money that had been used to balance the budget was not spent and was returned to the fund balance. This year it appears that about $3 million of that will be spent.
The city’s budget is over $534 million, so while $3 million is a lot to most of its citizens, it’s less than 1 percent of the city budget.
The bad news on the budget is that Mayor Nancy Vaughan asked the staff to schedule four budget work sessions this year. The budget is supposed to be passed before July 1 and the city usually passes it in June. But every time this City Council meets to discuss the budget, councilmembers find more ways to spend money. With four budget work sessions, the City Council could end up with a hefty tax increase by the time the budget passes. Also this year the City Council won’t have City Manager Westmoreland smoothing things over and finding ways to work around some of the more outrageous spending plans suggested by councilmembers. Westmoreland announced he was retiring April 30.
The voters elected the most liberal City Council in modern times and the two most conservative city councilmembers, Tony Wilkins and Mike Barber, were not reelected. Wilkins and Barber did a good job of putting the brakes on some of the increased spending in recent years. Without them at the meetings, it’s hard to see any opposition to increased spending.
Last year the city increased spending by having a stealth tax increase. After the property in Guilford County was reevaluated, in order to have a revenue-neutral tax rate the City Council would have had to lower the property tax rate by 2.1 cents. The city didn’t lower the rate and enjoyed about a $5 million bump in revenue while loudly proclaiming it had not raised the property tax rate.
This year no such stealth increase is possible, and considering all the additional spending the City Council has already said it supported, a tax increase is extremely likely.