Budget battle looming?

New garbage fee could negate tax cuts for most
May. 18, 2014 @ 04:57 PM

As High Point’s elected officials this week begin the process of shaping the city’s next budget, it appears a tax cut may be in the offing for the first time in years.
What’s not to like about that? Plenty, potentially.
While City Manager Strib Boynton recommends decreasing the property tax rate by .8 cents — from 67.5 to 66.7 cents per $100 of assessed value — utility rates and fees would increase under his budget proposal.
Part of the reason involves the transition to a solid waste enterprise fund, which was implemented a year ago after the City Council decided that it was unfair for businesses and other large property taxpayers to fund a service — garbage pickup, in this case — that they weren’t receiving.
The council imposed a new monthly garbage collection fee to try to make the system fairer and bring about another benefit: lowering High Point’s property tax rate, which is one of the highest in the state among cities.
At the direction of council, city staff devised a plan to phase in the garbage fee so that it rises from its current rate of $5 per month to $14 per month, or $168 per year, by the 2016-17 fiscal year. The property tax rate would also gradually drop to 63.75 cents per $100 of assessed value under the plan.
In an email to council on May 5, Boynton wrote that, even with projected tax cuts, most residents will pay the city more under the plan, thanks to the rising garbage fees.
Only the owners of homes with a tax value of at least $250,000 will not see a net increase in what they pay the city once the garbage fee is fully implemented, he wrote.
“On the bottom line 85% of High Point homeowners will pay more with the $168/year fee because 19,583 of the 23,117 owner-occupied houses are valued at less than $250,000,” his email stated. “Renters make up 38% of High Point residents – many low to moderate income citizens – will end up paying a new $14/month or $168/year collection fee that is currently paid by their property owner in property taxes. Churches and non-profits will also be paying the new fee.”
Some argue that the tax rate must be reduced to make High Point more competitive in drawing new businesses.
“Tax rates are always a hot-button issue to citizens, although I haven’t heard of an instance where a business was thinking about coming to town and (the city’s tax rate) was up on their agenda, as far as factors they look at,” said Councilman Britt Moore. “I’m not 100 percent convinced on the enterprise fund yet, but, certainly, it’s something that’s going to be addressed in this budget.”
Most High Point business and commercial properties have to pay for their own garbage service, yet the property taxes they’re assessed go into the city’s general fund, which is used to pay for trash pickups.
Councilman Jim Davis said he thinks the enterprise fund is needed to change this.
If council goes along with staff’s recommendations, the monthly garbage fee next year would increase from $5 to $8, while the $1 monthly recycling fee implemented in 2009 would sunset.
This would amount to a net increase of $2 a month for solid waste services. In addition, electric, as well as water and sewer rates, are proposed to rise 1.8 percent and 3 percent, respectively.
Davis argues for a larger tax cut than what is proposed to offset the garbage fee increase. The reduction is needed, in particular, for businesses that pay a lot of property tax, he argues.
“Everybody talks about — they call us ‘High Cost Point,’ because our taxes are high and our utility rates are high,” he said. “If you take people that own a business that may have a $1 million building that pays a bigger share, they’re going to see a bigger decrease in their taxes, which puts more money in the economy.”