A Wilson-area taxpayer group is calling for a review of a controversial City of Wilson grant program that has distributed about $6 million in utility bill late fees to nonprofit cultural and social service groups during its 14-year history.

The fee and funding mechanism were created by the Wilson City Council in July 1989 as a way to aid groups requesting financial assistance from the city. Critics say the money should be used to fund key city services used by all residents, rather than narrowly focused organizations they believe should look for help from businesses and individuals.

“We’ve been fighting that for years,” said Bill Biddle, president of the 600-member Wilson County Taxpayers Association. “That money could be used to reduce electric rates or go into the general fund,” he said. “We object to funding them at all. That money should go back to the people.”

City council determines recipients

The city council decides who receives the money and the procedures are straightforward, said Harry Tyson, who oversees the grant program as part of his responsibilities in the Wilson city manager’s office. A $10 fee is assessed on electric bills paid late by Wilson’s more than 31,000 electric customers. At the end of each fiscal year, the city averages the fees collected over the previous three years, and gives out 95 percent of the amount to council-approved groups ranging from the Arts Council of Wilson to an after-school backyard wrestling activity that received $4,100 five years ago. The city keeps a portion of the funds for the council’s discretionary use.

More and more, local governments around the country are looking for new ways to support nonprofits, and the Wilson late fee is an example of trying to shelter the expenditures from the uncertainties of local budgets, said Steven Tepper, deputy director of Princeton University’s Center for Arts and Cultural Policy Studies. “These alternative systems usually don’t get reviewed every year. In general, it does escape public scrutiny,” he said.

Tepper said he doesn’t know of any other program like Wilson’s, calling it a “pretty creative” approach. Because it’s so unusual, he said it’s also more vulnerable to rigorous questioning. Tepper said he believes the debate is legitimate over how the program works and who receives what, and that those who make and receive the grants shouldn’t consider the money an untouchable revenue stream.

“The Wilson funding scheme – the late fee – is different than other kinds of taxes like hotel-motel taxes where the organization bringing in the money is related to the one receiving it,” said Tepper, a 1989 graduate of UNC-Chapel Hill who served as the executive director of the university’s bicentennial observance in the 1990s. “It’s doing something that has no direct link from the generator of the fee to the recipient of the fee,” he said.

Until last year, Wilson sought out applicants. Any nonprofit could apply for funding by completing a grant application, and as many as 80 groups did so each year. But Tyson said, the applications created headaches for the council. “Council members were lobbied over this money more than anything else. Groups would bring children and they’d get upset when they didn’t get money,” he said. To take the pressure off the council, the city decided to stop actively seeking applicants and, instead, to predetermine which groups receive the grants. Eight have been selected. Each receives a set percentage of the total pot each year, with a dollar maximum also in place. For example, the Arts Council of Wilson receives the largest chunk of money each year — 20 percent — up to $100,000. “It’s a closed process now,” Tyson said.

Biddle became aware of the grant program more than 10 years ago when he was plant manager for a business that produced soda bottles and other glass containers. The company was one of the area’s largest users of electricity, Biddle said. When he investigated ways to reduce his employer’s hefty electric bill, he discovered the city was collecting utility late fees, but giving the money to unrelated nonprofit groups instead of providing electric customers with a rebate or rate reduction. That angered him. After retiring in 1999, he began a crusade to end the program.

“I haven’t been any more successful as a private citizen,” he said. “I have made comments to city council, normally during public comments for the budget.” He said it can be hard to get elected officials to listen to his group’s position and, now and then, he wonders whether it’s worth the trouble. “It’s a circus when you go to a meeting with all these people asking for money.”

List of recipients

In July, the city handed out the first quarterly installment of the predetermined grants for fiscal 2003-04. In total, the eight organizations will receive the following amounts: the Arts Council of Wilson ($100,000); Imagination Station ($75,000); Opportunities Industrialization Center ($75,000); Wilson Community Improvement Association ($75,000); Wesley Shelter ($55,000); Flynn Christian Home ($10,000); Hope Station ($10,000); and Positive Change for Youth ($10,000).

The grant program has been controversial for years, said James Johnson III, a Wilson city councilman since 1992 who is concerned about the program. “Our budget is roughly $170 million, and this gets the most discussion of anything we do,” he said.

Johnson is uncomfortable with the change to predesignated recipients even though he appreciates that the city was trying to make the process less contentious. He says he never felt pressured. “I look at the bottom line and use my common sense,” he said of his approach to the grants and other council business. Johnson wants to return to soliciting applications and reviewing them all, but with one important change. “This debate needs to take place during the budget period, not after,” he said. “I’d like to have an open discussion about where this money is going.”

Johnson said he believes shining more light on the program may also force the council to address what he views as a conflict of interest involving City Councilwoman Gwen Burton, who is also the finance director for Opportunities Industrialization Center, a grant recipient. OIC received its first grant check for $12,660 in 1993. Since then, the amount has increased in all but two years, and in 1999, the organization’s check jumped to $75,000. Now that OIC is on the council’s pre-approved list, it is guaranteed 15 percent of the available dollars, up to a maximum of $75,000 each year.

“Yes, I believe it’s a conflict of interest for her to vote on funding her employer,” Johnson said. What’s more, he’s told Burton of his concern but she counters that the city attorney says it’s not a problem.

Burton’s actions have others raising eyebrows as well. “I think it’s a conflict of interest, yes it is,” Biddle said.

Tepper is unequivocal. “Anybody who is a recipient of an organization’s money shouldn’t be voting on it. She should remove herself from that,” he said.

CJ attempted to include Burton’s perspective in this story. Two phone messages asking for comment were left with the person who answered Burton’s OIC office phone. Neither call was returned.

Johnson is undeterred and plans to push for a re-evaluation of the grant program. “It’s time for us to steer this car in a new direction,” he said.

Martinez is associate editor at Carolina Journal.