NC: Charlotte Passes Budget With No Tax Hike

June 10--The Charlotte City Council on Monday approved a budget for the coming year that includes a small increase in water and sewer bills of about $2 a month for the average homeowner, but no property tax rate increase.

This year's budget passed easily, but city officials and council members are concerned about next year, when a tax increase or significant budget cuts are looming. The General Assembly recently repealed the business privilege license tax, which brought in $18 million for the city this year. That's about 3 percent of the city's $584 million general fund operating budget.

The general fund pays for services such as roads, police and fire, and planning and zoning.

Gov. Pat McCrory, who signed the repeal of the tax, has said lawmakers will work to find ways to restore money to North Carolina municipalities. Charlotte will likely feel the impact of the repeal for next year's budget.

"It's not clear how we will adjust," said Republican Ed Driggs, who voted against the budget.

In its general fund operating budget, the city will spend 3.7 percent more than the year before. Much of the new spending will go to a 3 percent raise pool for employees, and to cover inflation, fix streetlights, maintain technology and absorb higher health insurance costs.

The city will also spend about $700,000 to pay for the operating costs of the new Trade Street streetcar line, scheduled to open in 2015.

Council approved the budget by a 6-2 vote. Republicans Kenny Smith and Driggs voted no.

Democrats LaWana Mayfield, Greg Phipps and David Howard were absent.

The city avoided a property tax increase due to the growing economy, which boosted sales tax revenues by about 8 percent. In addition, Mecklenburg County's property revaluation had less of an impact on the tax base than projected.

Smith said his main concern was about the water and stormwater fee increases, which the Charlotte-Mecklenburg Utilities Department has said is needed to expand and maintain infrastructure.

He said he wants a "long-term funding model to bring stability (for water and sewer rates)."

Democratic Mayor Dan Clodfelter didn't vote on the budget. Before becoming mayor in April, Clodfelter was a state senator, where he said he was known as a "finance geek," examining how tax revenue is raised. Clodfelter has supported changing the business privilege license tax, though he wanted it to be "revenue neutral."

Clodfelter said he's concerned that the growing economy allowed the city to avoid a property tax increase, and that might not be the case in coming years.

"I'm not sure we can count on an 8 percent (sales tax) increase," he said.

Democrat at-large member Vi Lyles said the budget meets the needs of the city.

"Citizens expect to have roads to drive on, buses to take to work, police and firefighters to come when we dial 911," she said.

Council members made three changes to the budget during their "straw votes" in May:

--The city will restore $175,261 in funding for two after-school programs: Above & Beyond Students and the YWCA. The money will come from federal Community Development Block Grants.

--The city will increase its contribution to the Charlotte Regional Partnership, an economic development group, by $16,974.

--Charlotte will add a new planner who will work to preserve historic districts. The position will cost $88,322.

The city will spend more on its "enterprise funds," which are divisions of city government that mostly operate free of property taxes.

The Charlotte Area Transit System will increase the cost of a one-way bus and train ticket to $2.20 from $2. That is effective July 1.

Charlotte Douglas International Airport's $129 million budget is up 8 percent from last year. The airport will spend more on security, replace shuttle buses, renovate the terminal and concourses and transition about 150 employees to full-time status.

The city's total budget -- including enterprise funds and capital spending -- is $2.1 billion. The property tax rate is 46.87 cents for every $100 of taxable property.

Last year, council members approved a 7.25 percent property tax increase to fund a $816 million capital spending plan through 2020. That will allow the city to build new roads, sidewalks, police and fire stations, affordable housing and neighborhood improvements, among other things. The public will be asked to vote for bonds in November.

Copyright 2014 - The Charlotte Observer

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