Outlook: Recovery Amidst Uncertainty - TribPapers

Outlook: Recovery Amidst Uncertainty

Among other activities, Epic Recruiting has launched a webpage to help rebuild the Asheville Police Department. Screenshot.

Asheville – The City of Asheville’s Budget Manager, Taylor Floyd, presented city council with first-quarter data as part of City Manager Debra Campbell’s plan to have 2023–2024 budget issues come before members of council and the public early and often. Staff have currently budgeted $84 million for the next fiscal year, and revenues appear to be on track. To date, the city has collected about $9.5 million, which is small, but Floyd said most people don’t pay their property taxes until January or later.

The first item highlighted was that HCA-Mission and Buncombe County had reached a settlement in Mission’s challenge to its tax assessment. Before being purchased by HCA, Mission Hospital was a nonprofit, and so it paid no property taxes on the hospital, as well as the numerous satellite offices it owned. The local daily reported that after the purchase by the for-profit HCA, the hospital network was expected to pay $15 million, but in 2020, according to propertyrecord.com, HCA paid Buncombe County $5,541,665, Asheville $4,461,213, the Skyland Fire District $7,644, and Asheville City Schools (ACS) $1,074,832.

According to Buncombe County’s Tax Assessor Keith Miller, the county assessed just the hospital at $527.8 million in 2020. HCA countered with an offer of $426.4 million, and the two settled at $475 million. Then, the county assessed just the hospital at $559.5 million in 2021. HCA countered with an offer of $351.9 million, and the two settled at $499 million. The $499 million value holds for 2022. The values settled upon were applied retroactively, so HCA received a tax credit to be deducted from its current tax bills. Consequently, Buncombe County will receive $590,110 less; Asheville, $483,028 less; and ACS, $131,055 less.
Floyd, not wanting to slight the hit, nonetheless observed the loss to the city’s budget was a smidgeon over half a percent of the general fund, and said this was no cause for alarm. Staff expected growth from construction would compensate. Councilwoman Sage Turner, however, said she was “dismayed.” Some comments were made off-mic, the gist of which seemed to be that Mission may continue to seek lower assessments. No comment was made about how much HCA pays in county and city taxes.

Floyd next reported that the city received its portion of sales tax revenues collected through July on October 12. The amount, $3,609,670, was 8.5% higher year over year, but so was the Consumer Price Index. With less inflation, year-over-year sales tax growth for the two previous years was 17%. Collections as the year proceeded were likely to slow, due to both economic volatility and a near certainty that interest rates would rise, tamping down consumer spending. At $3,990,235 for the quarter, revenues from permits, sales, and services were expected to continue to flow at the current rate.

The city’s enterprise funds were mostly on-target, with collections running from 1% to 27% of annual totals among funds. Floyd highlighted the Parking Services Fund, which includes metered spaces and garages. While tracking with budgeted amounts, estimated revenues from garages were lowered considerably after collections ran at only 7% of budget for the first quarter of last year. Current revenues, Floyd said, are still not back to pre-pandemic levels. In 2019, the city collected $1 million in the first quarter. This year, it has collected only $800,000, which is “still much better than the $300,000” the fund collected in the first quarter of last year.

The Street Cut Utility Fund was only 1% of the budget. Floyd explained that the fund processed its receipts at the end of the quarter, so no data was available yet. Also lagging was the stormwater fund, which Floyd said bills its commercial clients only twice a year.

Floyd said that while the Transit Fund is on-budget, issues continue, but only one route, WE1, is running at a slower frequency due to driver shortages. The city did, however, program $300,000 in ARPA funds for transit, along with $2 million for the general fund. These amounts have not been touched, and Floyd hoped the city would be able to repurpose them.

Another area of uncertainty is the new management contract the city has with the Municipal Golf Course. The new contract calls for a profit-sharing agreement with the city, which the city expects to be beneficial for golfers as well as the city.

However, profits may be sparse for a while as the new managers will be spending a lot on course upgrades upfront.

Sales of inebriants, which tend to run countercyclically, were up, as reflected in a $900,000 year-over-year increase in Alcoholic Beverage Control (ABC) revenues. The ABC is not a municipal enterprise fund, as the control board is an arm of the state. The city merely collects a share of the redistributed excise taxes.

On to expenses, Floyd showed a pie chart, the most remarkable feature of which was the 10.7% slice that represented debt. He didn’t talk about that. Instead, he focused on personnel costs, which made up three-fourths of the budget. These were tracking at about 20% of budget, but that was mainly because salary adjustments were not going to take effect until the first of the year. These include changing the minimum salary for full-time employees from $35,360 to $36,816 and giving most other employees a 2% or 5% pay raise. The city has also contracted with a consultant to help with compression analysis. Floyd said personnel costs would “feature heavily” in budget discussions due to “significant increases” in healthcare costs, along with housing costs and inflation.

An area of concern was recruitment and retention for the Asheville Police Department (APD). Floyd described the department as “struggling to recruit,” and Campbell said the city was just beginning to implement aggressive means of adding quality officers to the force. Incentives already committed in the budget include increasing the 5%-of-salary supplemental pay for officers with advanced law enforcement certification from a one-time payment to an annual payment. Employees will also receive referral bonuses of $1,000 for a new hire; $3,500 for a new hire who attends the local training academy; and $5,000 for a certified new hire. Other perquisites include relocation assistance and additional paid leave.

The official statement on how the city would pay for this is, “Staff estimate that these changes can be absorbed within APD’s personnel budget through additional APD savings that have been identified based on higher than previously projected vacancy rates.” The number of vacancies was not discussed, but the city has contracted with Epic Recruitment, which has created a website, a social media presence, and YouTube videos. Help-wanted ads for APD now describe “urgent needs.”

Councilwoman Kim Roney expressed frustration at the way the presentation only provided some numbers, like only an increase or only this year’s amount. She asked that future presentations revert to standard disclosures of budgeted and actual amounts for this year and last.