News: Charlotte Exclusives

Tax-Hike Treadmill?

City budget full of frills, not essential services

It is not a surprise, but it is certainly disappointing that Charlotte is poised to step onto a tax-hike treadmill that, given city spending habits, shows no sign of slowing down anytime soon. The new proposed budget would hit homeowners with a property tax rate increase plus water and sewer fee hikes, in all a couple hundred dollars more each year for city services for many residents.

Businesses would be hit with a big increase in the business privilege license tax on gross receipts. The reason for that is fairly plain, as city revenue from the levy has been flat in recent years, holding at about $8.5 million. And we can’t have flat revenues.

“I don’t see any other way to add the police officers and do the expansions, other than a tax hike,” city manager Pam Syfert told The Charlotte Observer. Syfert cannot really believe this about city spending.

Charlotte is far from operating with a core services-only city budget. As long as non-essentials like, for example, $75,000 for the mayor’s “international cabinet” are on the books, the property tax hike will, by definition, fund that line item first. Not more police officers, firemen, or better roads.

In fact, a passing glance at recent city operating budgets reveals millions in what can only be called non-core expenditures. Overall the city will spend $1.56 billion this year, up from $1.39 billion just the year before. Syfert projects a roughly $10 million budget gap for 2006, despite the upward trend in revenues, with property taxes totaling $223 million this year, up from $186 million in 2002.

The Charlotte Conventions & Visitor’s Bureau gets $2.4 million a year, much of it in a pointless attempt to book space in the cash blackhole known as the city convention center. And another $1.2 million a year goes to a “tourism subsidy” for other Mecklenburg towns. Since 2002 another $200,000 a year has been thrown at Advantage Carolina, another Chamber of Commerce-led rah-rah outfit.

Also, recall that the city now contributes just over $3 million to the Arts and Sciences Council each year, certainly a nice thing but not something, like arrest criminals, that only government can do. Plus city support for various cultural facilities is over $2 million a year.

Economic Development expenditures roughly doubled in the last three years, from just over $1 million in 2002 to almost $2 million this year after peaking at an absurd $2.2 million in 2004. On top of that the city’s wholly unnecessary Business Investment Grants zoomed from $45,000 in 2002 to almost $181,000 today. The correct amount of spending for these line items is zero.

Already that is about $11 million a year in non-core spending. Look closer at city operations and more disturbing trends are evident. City spending on the Charlotte-Mecklenburg Government Center was $372,481 in 2002 and now stands above $520,000, an almost 30 percent increase.

Starting in 2002 the city has spent almost $39 million on information technology for the city — computers, networking, and such – compared to only a net of $19.3 million on street maintenance. Now it may be that is all money well spent, but this is about the priorities the city sets for itself. Besides, that must be one heck of an IT staff. A roster of 53 will claim compensation of almost $4.8 million for 2005 while requiring an additional $3.3 million in technical and other contractual services.

It must also be noted that city funding of vital fire protection has not exactly been slack in recent years, with funding for operations going from just under $53 million in 2002 to over $60 million this year, a 12 percent increase.

There is also a real cognitive problem with proposing to raise taxes on retailers via the business privilege license and on developers via higher permit fees without first swearing off giving money away to, well, other retailers and developers. Let’s hope the city council figures this one out, at least.

In fact, let’s hope the city council fully understands that support for a tax hike to fund things like the mayor’s international cabinet, econ development, and business handouts sets the standard dangerously low for future tax hikes. On second thought, that would be no standard at all.