Asheville – A discussion of the City of Asheville’s budget priorities and revenue shortfalls left several categories short on funding. COVID was hard on everybody including the government. Asheville’s City Manager Debra Campbell said the city staff had, with input from public listening sessions, been looking for ways to reimagine how the city works. They’re soliciting ideas for how to do things more effectively and are open to trying entirely different methods.
Finance Director Tony McDowell added that to tighten the city’s belt through the crisis, the city had, unlike many municipalities, avoided layoffs, furloughs, and service reductions. Significant strategies included drawing the fund balance below the city’s policy target but still within state guidelines, awarding no raises for the first time in about eight years, freezing vacancies and expanding neither budgets nor services.
While McDowell was bracing the city for long-term economic decline, sales tax revenues came in 8.4% over budget for the first half of the fiscal year, the property tax base increased, income from fees remained on budget, and the city received CARES Act subsidies for compensating essential civil servants. While the city’s adopted budget estimated revenues at $133.1 million and expenditures at $134.8 million, the latest estimates were at $137.1 million and $133.4 million, respectively.
Enterprise funds did not fare so well. Water Resources revenue was down because the fee the city had been charging for water system capital improvements was knocked down in court. The city agreed to a settlement, the amount of which was not mention in its press release, but funds were withdrawn from the enterprise’s fund balance to cover lost receipts. Due to a great need for infrastructural improvements under the purview of the Stormwater fund, McDowell said a fee increase will be for the FY2022-2023 budget.
Revenues at the Harrah’s Cherokee Center-Asheville were down $2.6 million for obvious reasons. Parking revenues were also down by the same amount, and the city hopes to use American Rescue Plan Act (ARPA) revenues to make both accounts whole. In a budget presentation seriously lacking in numbers, no exact amount for Asheville’s ARPA disbursement was mentioned. A draft document released by the Senate Democrats, however, puts the number at about $4.25 million.
The Transit fund incurred losses of only $2 million while continuing to operate fare-free. Since social distancing forced a cap of 10 riders per bus, the city contracted with Young Transportation to carry overflow. The city expects to have $1.1 million restored to the fund by the reinstatement of State Maintenance Assistance Program (SMAP) funding and cover the rest with one form of federal funding or another.
For FY 2021-2022, McDowell assumed sales taxes would grow 5% and property taxes 2.6% for a net $5.6 million increase in revenue. Increases in expenditures are estimated to run around $4 million. High-ticket items for the city’s budget included hiring more personnel for maintenance in the River Arts District and more firefighters, and staffing positions the city can no longer continue to freeze. The state is also requiring the city to increase its contribution to its employee retirement fund.
Operational budget drivers are led by $380,000 for fulfilling economic development incentive agreements and $300,000 for a new recycling contract. Other added expenditures were for the climate-change response, body-worn cameras, homelessness outreach, and business inclusion training.
The city, however, had more strategic goals than it could fund, so Budget Manager Taylor Floyd put some numbers on high-priority items. He suggested spending another $1 million to expand transit to provide more coverage and work later hours, $50,000 on small-scale neighborhood grants, $200,000-$300,000 to continue to engage the community in visioning reparations and $7.8 million to bring civil servant pay closer to market rates. Reimagining public safety was “up there” as a priority, but funding amounts were not available.
While the city, like all other organizations, awaits official word from the US Treasury on what constitutes lawful expenditures for ARPA funds, Floyd suggested spending $600,000 on administering the funds, $5-6 million on covering COVID-related losses, and over $10 million on housing the homeless with half that amount going toward low-barrier (no questions asked) shelters.
Councilwoman Antanette Moseley asked where the equity was in the spending and was met with a long silence. Assistant City Manager Cathy Ball finally dialed in and said minorities constitute about 30% of Asheville’s homeless population. Others added the amounts presented accounted for only half the anticipated ARPA spending.
Last, McDowell said the city’s current tax rate was 42.89 cents, and, following the recent revaluation, the revenue-neutral rate would be 38.30 cents. But the council won’t lower taxes. McDowell said each penny generates $1.9 million in revenue.
So, if the council opted to maintain the 42.89-cent rate, growth in the tax base combined with a $300,000 fund balance transfer would be almost enough to pay for the $10.2 million in projects presented by Floyd. This would, however, leave council priorities – like climate justice, BIPOC outreach, solar installations, food policy, school equity, business inclusion, corridor studies – hanging.
Three times, Councilwoman Kim Roney recommended deriving revenues by defunding the police 50%, faulting their vocation as the root of violence and harm in the community. Councilwoman Sage Turner was optimistic a big hotelier would come along to make a large contribution, via extorted community benefits, to the city’s reparations fund. Roney, Turner, and Councilwoman Gwen Wisler wanted to liquidate any surplus over the state-mandated minimum in the city’s fund balance for reparations spending. Wisler said the city should not let the county’s decision to raise its property tax rate intimidate the city into not raising its rate as well.