Cuts an afterthought in budget process
In the end, cutting High Point’s budget proved to be a lot harder than some predicted it would be.
The $342.8 million budget the City Council adopted last week represents an increase of $15 million. Facing uncertainty about potential lost state revenue and other factors, the council elected not to take a scalpel to the meat of the budget by reducing services to the public or cutting personnel costs, and opted to endorse most of what City Manager Strib Boynton recommended.
For the most part, the budget holds the line on spending.
A $4.7 million rise in wholesale power costs — most of which the city is passing on to electric ratepayers — accounts for a portion of the budget increase, as do several capital projects, including planned upgrades to the recycling facility ($3.5 million), the Jacobs Place stormwater improvement project ($3.8 million) and replacement fire trucks ($1.35 million).
City leaders defended the budget, arguing that they performed their due diligence in reviewing Boynton’s recommendations in detail.
“Did we come up with the best budget we possibly could have? In my opinion, I would say, yes we did. Did we go in and do a lot of slashing and burning with this budget? No,” said Mayor Bernita Sims. “I believe everybody on this council struggled through this budget and did a lot of line-by-line questioning of what was in the budget. I don’t think one stone was unturned by this council regarding what was in this budget.”
Sims argued that the council should start working with Boynton early in the fiscal year, which begins July 1, if it wants to explore more systemic cuts.
“The citizens of this community have a certain expectation of what they would like to see the city provide, so when you talk about reducing those things, it’s a matter of engaging the public on what you are willing to give up,” she said.
From the beginning, the potential impact of N.C. General Assembly action on the city’s coffers was a dominant theme in budget discussions.
Boynton told council that state revenue reductions and cost-shifting are expected to result in the loss of about $1 million to the city next year. He warned that much greater losses loom if sweeping state tax-reform legislation is passed. Some bills that have been introduced but not passed in the state legislature would take away or reduce cities’ ability to levy utility franchise taxes and some types of sales taxes, adding up to a possible loss of $6.9 million for High Point over the next two years — the equivalent of about 7 cents on the city’s property tax rate, Boynton said.
It’s unlikely the state cuts will be this draconian, but council took Boynton’s message to heart.
“No budget is perfect, but I think we ended up with a good budget with what we had to work with this year,” Councilman Jim Davis said. “We started $5.7 million in the hole.”
City officials framed the debate over the budget as a trade-off between holding the property tax rate steady and instituting a new $5 per month garbage fee. They argued that the fee is needed to help defray the cost of garbage collection and pointed out that some other cities charge for this service. The hope is that the new fee could eventually facilitate a reduction in the property tax rate.
“While this fee is somewhat difficult for all of us to absorb at this point in time, if we look down the road, I think it will bear fruit for those who use this service and are taxpayers,” said Councilwoman Judy Mendenhall.
Council members Foster Douglas, Jason Ewing and Jay Wagner voted against the budget. Douglas at one point raised the idea of a 2 percent budget cut across all city departments in lieu of the garbage fee, but officials painted a doom-and-gloom picture of how this could affect core services, including police and fire.
“It was very drastic and it would handicap, I’m sure, a lot of departments if we were to do an across-the-board cut,” said Ewing. “I feel we need to still find some ways to make cuts, but I wouldn’t want to hit police and fire with that drastic of a cut.”
Ewing suggested cutting an additional $445,000 in order to facilitate a half-cent tax-rate cut. He said he thought it could be accomplished without touching police and fire.
Councilwoman Becky Smothers pressed Ewing during the vote last week on which departments he would suggest cutting and pointed out that the governing body budget, which includes council salary and travel allowances, totals $424,000.
“If we’re going to ask others to give up, why don’t we all take a pay cut?” said Smothers.
Not surprisingly, no one voiced support for this idea.
High Point’s 2013-14 budget maintains the property tax rate at 67.5 cents per $100 of assessed value. The owner of a $100,000 house will pay $675 in 2013 city property taxes. It includes a new $5 per month garbage collection fee for 37,000 residential and small-business customers. The garbage fee and a 4.9 percent increase in retail electric rates take effect July 1. The rate hike and the new fee will generate a $10.84 monthly utility bill increase for the average residential customer, according to city estimates. An additional cost increase will come later in the fiscal year when water and sewer rates will be raised. The city has not yet determined when this will occur.