No Chapel Hill Tax Increase!

At the May 7th Town Council meeting, Roger Stancil proposed a 1.9% tax increase for the next fiscal year.

This seemed like a pretty good figure, considering other local governments were asking for more. Durham County has a proposed 3.9% tax hike, Wake County is looking at a 3.6% proposed increase, Carrboro has a proposed 2.9% increase. Orange County is proposing a 3.7% increase, and many folks would like for it to be more.

At a Council meeting two weeks later, Mayor Pro Tem Bill Strom pointed out:

"We're getting remarkably close to being able to get to a no-tax-increase budget," said Strom. "I would like to see a flat budget."

He asked for staff to come back with a proposed budget that would not raise taxes.

Last night, that proposal received unanimous support from the entire Council.

This does mean we're not getting a few things we would probably like:

As a result, the town will not hire an additional code-enforcement officer for the Inspections Department, at least in the first half of 2007-08, and it will freeze a vacant officer position in the Police Department.

But there are tough times economically everywhere, and I appreciate the Council's determination to budget for what they need and not necessarily everything they want in this cycle.

The fact that this is possible speaks to sound fiscal management by the town staff, as well as good leadership by the Town Council.

Good for them!

Issues: 

Total votes: 171

Comments

It's an election year. I hope that strong statements of trying for a flat budget, and "sound fiscal management by the town staff as well as good leadership by the Town Council" prevails in non-election years.

I agree with Laurin's sentiment, and since there was no increase in the general property tax rate last year either when there was no election, I am confident the town will continue to do its best to keep taxes down.

I don't think Cal wanted to go out with a tax increase.

So if I borrow from my kid's college fund to pay off my credit card debt, that's a good thing, right?

Tom, two years digging into the reserves in not fiscally responsible. There are structural changes we need to make. Unfortunately, the majority of this Council is not prepared to make those choices (choices, by the way, that have been available for quite awhile).

From the CHH:

To avoid a tax increase, Stancil had to drop $150,000 from his proposed budget for improvements to Town Hall and possibly for renovations to the Post Office/courthouse building on Franklin and Henderson streets. In addition, he will cut $100,000 he had set aside for retiree health liabilities and trim the council's contingency fund by about $12,000.

Stancil had proposed a tax increase of 1.9 cents and cautioned the budget was lean even with that increase, since the town will have to pay $1 million more in 2007-08 just for increased debt service. He and Finance Director Kay Johnson were concerned that a step proposed by Mayor Pro Tem Bill Strom and now approved -- to use some $519,000 for the next budget that Stancil had intended to put into savings -- could just delay tax pain until next year.

From the N&O

The flat budget also requires using about $520,000 in departmental surplus that Stancil had intended to use to replace some of the town's savings that will go to pay off debt for projects such as the Homestead Park Aquatic Center and the new Town Operations Center. Stancil wanted to bank that money to mitigate future debt payments.

The council is likely also to postpone minor renovations at the Town Hall, including new carpets.

"We have places where we're holding it together with duct tape," Assistant Town Manager Bruce Heflin said.

Both stories suggest that we are just delaying the inevitable, and those things that will not get done will probably cost a lot more down the road. Is it any wonder why some of our cynics might assume that this decision could be linked to the November election where (?) incumbents will run for their seats?

Fred, making an honest assessment is not being cynical.

Luckily, it's never too late to start implementing some structural changes to drive cost out of the current system.

I don't think the Chapel Hill electorate is so fickle that the difference between a 1.9% tax increase and no tax increase would play much if any role in their voting choices, but I could be wrong.

Will, my understanding is that the fund balance is being maintained at 15%, same as last year.

Of course this budget is not set in stone. If folks are uncomfortable with it they have Monday night to come out and suggest alternatives.

If the Council does approve the no-tax budget for FY08 we will have had, by my recollection, no increase in 3 of the last 5 years (FY04, FY07, FY08). During this period the town will have renovated the Hargraves Center, begun renovating the Community Center, renovated the IFC building, built the Town Operations Center, bought 200 acres of open space, created a downtown police unit, begun planning the library expansion, created the Downtown Partnership, begun the Lot 5 project, and I'm sure a great many more things. Not a bad record for a period where taxes were increased only twice.

Could we do more? And could we do more with more taxes? Absolutely! And I for one have publicly said that I would be more than willing to pay more taxes for increased bus service (and a number of other things). But I'm still working and getting a regular income. And I don't know how we can raise taxes without having a detrimental effect on people with fixed incomes or people with lower incomes. The bulk of the tax increases from recent years have come from the County and the School District, and for obvious reasons.

I would like our Town to do more for its citizens but I just haven't heard anyone put forth a credible way to do this without raising taxes and burdening those least able to bear the burden. And while property values may be going up in Chapel Hill many people aren't in a position to tap into those increases in equity to handle their daily expenses.

Tom, I think to some it's the political difference between any increase vs. no increase, the amount being immaterial.

There are, however, tools that allow governments to calculate the cost of delayed expenditures until some later point in time, but getting some to agree that keeping today's dollars is not such a good deal if it means expending even more dollars down the road.

A good example of pay now vs. really, really pay later is for a number of years getting a Town Ops Center for almost nothing, not "investing" the money representing the true cost of the facility for future use, and then having to fund a new facility from scratch. UNC did the same when Pres. Spangler used his own King Air at no charge and then UNC had to buy one for the new president. For the sake of the budget it might have been better if they budgeted for it, paid him and he just gave the money back. At least they would know the cost of doing business.

Thus, what we see here in Chapel Hill is the natural (and expected) tensions between the professional staff's judgments (Kay and Roger) vs. the political judgments of the elected Council. Since the staff is accountable to the Manager and the Manager is accountable to the Council, the Council properly makes their decisions understanding that they are accountable to the citizens, and in actuality, to those who vote.

Tom, where to start with "Chapel Hill electorate is so fickle that the difference between a 1.9% tax increase and no tax increase"?

The other night a gentleman at the NRG forum said he was paying $10 a week in taxes and he didn't want to see them increase. "Not a penny more" was my thought when I considered the $10+ I'm paying a week and the inability of our current Council to put its financial house in order.

I could be snarky and suggest that someone that doesn't pay a mortgage and taxes in Chapel Hill might consider a "piddling" %2 increase not a big deal but that wouldn't be too charitable. It's the kind of attitude, though, I would expect from someone that doesn't have to deal with the ever escalating costs of living in Chapel Hill - kind of a rich kid's view of the world - not something I expect from you Tom.

How about this, any increase, even the ones GeorgeC is willing to foot, should come after some overdue restructuring in the way our Town operates? Until we have targeted, measurable reductions, say, in energy usage or better management of our Town's vehicle fleet or smart use of F/OSS software or many of the other suggestions that came during our last budget crisis, we shouldn't be considering any increases.

And what of the lessons we learned during the last "crisis"? Council was real gungho to have public involvement then - to the extent they said they would do it regularly. Instead, it appears, that year's citizen outreach served more as a political shield for possibly unpopular cuts than a real attempt to tap into the incredible Chapel Hillian skill-base.

GeorgeC, I don't think ever increasing taxes are a given, even in Chapel Hill.

I'd like to see our Town show some fiscal courage and restore our reserves to the level they were before the NC legislature relaxed the requirements. Our "known" debt burden should give our Council pause. Within the context of the Lot #5 boondoggle, inflationary pressures, foreseeable energy cost increases, not to have a prudent sum to ride out the coming macro-economic storm is irresponsible.

After that, how about a 5 year plan to reduce our local tax burden? Holding the tax rate constant while property values increase doesn't help. Reassessment is right around the corner, what's the effect going to be on our fixed income folks?

Of course, this is my view.

The "rah rah" growth crowd doesn't seem to have any problem exacerbating the Ponzi scheme we currently got going . I guess projects like Lot #5 - building those million dollar condos Downtown that are supposedly going to inflate revenues (paid for on the public's tab) - is a shell game we're supposed to live with. Are we supposed to "smart grow" ourselves out of the coming cash crunch?

Fiscal leadership over the last two years, GeorgeC, has been lacking. Without a rethink in our Town's spending priorities, its tax "carrying capacity", well, we're on a path that is only going to hurt Chapel Hill's long term viability as a diverse community.

We're well on our way to making Chapel Hill a gateless gated community.

And Tom, as much as I like not paying increased Town taxes and no matter how much you want to spin it to the benefit of your friends running this year, this was not a budget or a budget process to celebrate.

At the risk of sounding like a Republican (and you know that I am not), I am thrilled that we will not have a tax increase this year! I echo the comments of Tom and George, and would like to add that it takes vision and expertise to create a budget in which expectations for municipal service are met with taxpayer satisfaction. Thank you Council and staff for your creativity and commitment to keeping Chapel Hill affordable. Bravo!

Boy do I disagree with some of you.....Election year or not, I appauld the entire Council, and especially Bill Strom for leading the charge, for NO tax increase this year. I have historically been a skeptic of this Council's fiscal policies, and have not been shy about publicly stating that, but today they are due a lot of credit for not raising our taxes for the second year in a row. This has been especially hard to achieve as the budget is absorbing the town operations center debt service, no reduction in town services, merit pay increases for town staff, while maintaining our strong credit ratings.

The majority of citizens I know: in my neighborhood, my friends who live here, the many people I interact with on the four boards/committees I sit on, do not want our taxes raised. The Council heard them this year.

I, for one, understand how much hard work the town staff and the Council went through to achieve this budget and no tax increase. So I appauld, and thank them for it.

Gene, yu're not worried about eating next year's seed corn?

What about our debt load, how do you see us managing in a tighter economy? What about the bond debt we're planning to take on - do you think our Town is prepared?

Got to disagree with on the "hard" work - staff yes, Council 'fraid not. Where was the leadership on structural improvements to streamline our cost structure? What about the open-ended Lot #5 commitment (oh, yeah, that's not going to cost a dime more, is it?)

I do agree on the general ebullience ebullience on not getting socked, directly, in the wallet again but your guys praise is misplaced.

Come on, Mayor(?) Strom to fore? Gak!

Charge? Yeah, Bill has led, especially with Lot #5, in running up the credit card.

Council has an obligation to live within our citizens means - all our citizens. Again, borrowing from the kids college fund so you can throw a big party is irresponsible.

The consequences of this Council's continued fiscal direction will change the complexion of Chapel Hill. Again, is a gold-plated Chapel Hill what we want?

The Town Manager asked the Town Council to increase the town budget by $6.1 million for the next fiscal year, or to add 1.9 cents to the municipal tax rate. The staff arrived at this figure after following their process and now after the Council process, we will not have an increase. I am happy to not pay more taxes, but who can tell us the "cost" in the out years for not having an increase this year? No costs? Only a little? But how much?

Will,

Your post is littered with personal issues that I wouldn't comment on. What I will respond to is two points:

1. We have an honest disagreement on the positive or negative effects that Lot 5 will bring. I have publicly said I believe there will be positive effects (financial and others), you have publicly spoken that you believe there will be negative effects (financial, scale, etc.). We won't know for several years who is correct, I'll match my Lot 5 assumptions against yours any day, so let's move the discussion on. Your whining about Lot 5 is getting tedious.

2. Besides Lot 5, there are two seperate issues that are increasing the town's debt: the town operations center, and the initiatives that the Council is proceeding with that the taxpayers voted for: parks, library expansion, etc.

Both the Chancellor and our Mayor have told me that the town had to move forward with the operations center, that the town could not keep it's operations on the Horace Williams property forever. So the Council proceeded with the bond and the result is the facility we have today. We have to absorb those costs: through more efficient management of the budget, or raising taxes, or some combination. Next year it will be absorbed by budget belt tightening, which is what the citizens budget committee advocated two years ago.

The balance of the debt the town is taking on is for the bonds we citizens voted for, and expect that some time in the future we will have to pay for. So except for the Lot 5 debate, how is this Council running up the debt without citizen involvement?

Gene, I guess we could wait a few years and see if Lot #5 delivers (though how we'll know sans real metrics is anyones guess).

"I told you so" is not my style - I'd rather avoid a train wreck even if it involves "whining" on OP. We've known about the new debt loads - TOC, aquatics center, etc. - for some time yet what has the Council down to position the budget to absorb these costs, continue to deliver services at an adequate level, without affecting our debt rating or forward ability to borrow (more key than ever given the shrinking reserves).

Let me use an example of a kind of the "penny-wise, pound foolish" approach we've seen of late. Jim Ward, during the Lot #5 "debate" (whoops, Lot #5 again - sorry about that), pointed out Council was failing to spend "pennies" to equip Townhall with energy efficient bulbs.

Again, there was a slew of recommendations that, at least to me, seem common sensical, for reducing the Town's cost structure. While there's been some frittering on the edges - the new Police fleet for instance - where's the substantive change our tax burdened citizens deserve.

The residents are a golden goose to be constantly squeezed for revenue (or shown the door when they can't pony up).

As far as personal, I assume you mean my criticism of Bill's leadership. Yes, I'm personally disappointed in the tack Bill has taken these last couple years - especially gamesmanship over public policy on a number of recent development issues (I won't mention that which doesn't bear mentioning lest I be accused of further "whining"). The consequences of TC-3 deserved a full airing before adoption - just as the 90' limit/half density zone it replaced had when it came before Council.

Fred Black wrote: I am happy to not pay more taxes, but who can tell us the “cost” in the out years for not having an increase this year? No costs? Only a little? But how much?

Is democracy about only voting people out of office if you don't like the results of their policies or is there a way for citizens to ask for (and expect an expeditious response) this type of analysis from their elected officials? I know the managers office can provide well informed predictions for 3-4 years in the future, but I haven't listened to the council discussions to know if those predictions have been provided or not.

I think that there is almost no relation between our
town tax increases and our town council elections.
Our town taxes, and their (small) increases
have never been much of a political issue, at least in
the 25 years that I've been interested in local politics.
I can't remember any fiscal conservative running
successfully for town council. Chapel Hill keeps
a good fund balance, within the regulations of
the NC Local Government Commission, and the
town council members, to a person, are very proud of
and jealously guard the AAA bond rating that the
town has received. There is no other town of our
size in NC that enjoys this rating, with its subsequent low
bond interest rates. CH is fiscally well-managed.

All CH councilmembers do understand
that we Chapel Hillians have to pay county taxes, and
that is where the ever-larger increases occur. I don't
know how much the county commissioners will decide
to raise our taxes this year. Following the commissioners
instructions, the manager proposed a 3.7 cent, 4 pct
increase. After the school parents raised their
annual howl, this year louder than usual and likely
for good reasons, the commissioners may bump
the figure somewhat. Health, education and welfare
are county functions, and for the last decade, this
is where the bulk of our local government money goes.
CH councilmembers know that they are lucky; their
decisions are much easier.

There are four levels of government; federal, state,
county and town. The first and last get the most
publicity. But the third seems to impact our wallets the most, because their annual changes vary the most.

Actually the 1st (federal) impacts our wallets the most. As incredible amounts of tax money are channeled into war and and an ever-growing number of corporate welfare programs, funding is denied for local needs that were previously met with some of this money. Local governments increasingly find themselves scrapping for crumbs.

Local governments should draw the line and not raise taxes, while making it clear where the money is so that citizens can direct their energy at the federal corruption that enables the continuous revenue stress at the local level.

If we took all the tax money collected in the U.S. and distributed it fairly, we would all get tax reductions.

Excellent points, Mark M. The huge bulk of our tax burden is sent to foreign countries as aid or to fund military interventions. Every year, Congress passes an energy bill that gives hundreds of millions of dollars to domestic oil companies to "lessen dependence on foreign oil". We give away so much in corporate welfare it's ridiculous, and most politicians are beholden to those companies for their campaign funds and support, so they go along with the existing program.

Why do we still have military bases in South Korea 50 years after our war there supposedly ended? Why do we have so many military bases in Japan and why are we building 14 permanent bases in Iraq now? The federal budget has been increased 33% since 2000. Anyway, I'm glad to see that Chapel Hill has a bit of fiscal sense, although they could have perhaps tried to cut down the budget a bit and lower taxes :)

 

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