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MossColumn: Partying like it's '07

By Bill Moss, Published: June 15, 2015

Not that I necessarily expect politicians to display inspiration, ambition and craftiness when it comes to the annual drama of budget work. But I would say that this year’s performance has been a particularly dismal show.

The recession hangover, anemic tax base growth, rising health insurance costs and a cost shift from the state to local taxpayers all contributed to a landscape of gloom. Here are my takeaways from the “Land of Revenue and Expense: 2015-16.”

Partying like it’s ’07

Our elected leaders are partying like it’s ’07. They’re sitting at the bar, staring morosely into their mug, averting the gaze of nonprofit leaders sitting at the table over there, declining to buy a beer for their down-on-his-luck neighbor. They’re channeling their parents’ Depression-shaped sensibilities. Today’s leaders lived through the crash of ’08 and they won’t go back. The indicators point to improvement in the economy — the real estate market in Asheville is a house afire and ours is gaining momentum all the time; we’re close to practical full employment; Main Street is packed — yet our local bodies still sweating over past debt (Hendersonville) or puckering over future debt and operations cost (Henderson County) or conceding that the fire departments have already filled the public’s very limited appetite for higher taxes (everyone).
Going into the reappraisal year, elected leaders and administrators anticipated a better overall gain than we saw. City Manager John Connet told council members during a workshop that he anticipated a gain in the tax base of 4 to 5 percent. Instead, real property inched up in value by 1.72 percent.
During a county budget workshop last week, Commissioner Grady Hawkins suggested that one reason 11 out of our 12 volunteer fire departments asked for a tax increase is that the fire chiefs got “a little bit less tax base than they anticipated with reval.”

Legislature raised your taxes

We’re seeing the effects locally of a cost shift from the state government to cities and counties. The dynamic was starkly evident in the 2-cent property tax increase the Hendersonville City Council endorsed. The city lost $386,000 in revenue when the Legislature repealed the privilege license tax on businesses. Hendersonville, like many cities, based the tax on gross receipts. Legislators made the argument that the business tax was burdensome to retailers (especially grocery stores) with big overall sales but thin margins. Whatever the merits, the General Assembly cut off debate by repealing the tax, shifting the tax burden from Ingles, Wal-Mart and Home Depot to Hendersonville-based businesses and city homeowners.
The state’s role came into play in Laurel Park, too, where council members cited a drop in Powell Bill road repair money as one reason they needed to raise taxes. Taxes are going up by 3 cents in the historic resort town featuring a steep mountain crisscrossed by 25 miles of city streets.

March to mediocrity

The budget season has been a depressing and uninspiring march to mediocrity.
In Mills River, Town Manager Jeff Wells rolled out an “operational and maintain what we have” budget that scraps park improvements.
In Hendersonville Connet said sharply rising health insurance costs, debt service, the business tax loss and anemic tax base growth had swirled up “a perfect storm” that made it necessary to raise taxes, even though city residents get nothing new aside from a few miles of repaving.
Hendersonville has shelved plans to develop Berkeley Mills Park, casting a thin reed of hope on a pending application for a state Parks and Recreation Trust Fund grant of $250,000 (which the city will have to match over three years). The promise and grand plans city leaders had cooked up for the Historic Seventh Avenue District have vanished. It’s anybody’s guess when — or if —Seventh Avenue renewal will regain the momentum it had a year ago.
Although Flat Rock has not presented its budget yet, Vice Mayor Nick Weedman was already groaning week before last about the fire taxes the village will have to pass on to its homeowners.
County Manager Steve Wyatt warned commissioners that the county faces challenges in capital needs, repairs, school funding and service demand growth. “Hindsight is not a luxury those in leadership positions can enjoy,” he said. I don’t know if they’re enjoying it but hindsight seems to be what guides them.
Laurel Park was the one place where an elected official stood up and called for investment. It costs a lot to run the town, Mayor Carey O’Cain pointed out. Laurel Park has the roads. It picks up leaves and storm debris. It pushes snow off the roads. It builds and maintains parks. It owns a water distribution system and a sewerage system. It has a police force.
After Town Manager Allison Melnikova recommended a 2-cent tax increase, O’Cain argued for more. The town, he said, desperately needs to catch up on a backlog of repaving and drainage work. It’s indicative of this year’s low bar that a fighting for an extra penny to fund the prosaic task of public works qualifies as an act of political courage.
So, yes, another takeaway is that the road to higher taxes is paved with, well, fresh pavement. When they get their tax bill in August, property owners in Hendersonville and Laurel Park can thank North Carolina’s patchwork road ownership scheme. Counties don’t own roads or spend money on repaving. Using federal and state money, the DOT does the vast majority of road construction and repair. Cities that own streets pay dearly for the privilege. Laurel Park’s proposed 3-cent tax increase is going almost entirely to roadwork — more than doubling the outlay, from $106,000 to $222,000. A penny of Hendersonville’s 2-cent tax increase is going to roadwork.

No parking

Last year county leaders uttered the phrases “game changer,” “legacy,” “transformative” and “once in a lifetime” when they announced “Project Touchdown,” the unprecedented five-party agreement that will produce the $32 million health sciences building for Wingate University, Blue Ridge Community College and Pardee. That was then.
Commissioners are now slogging through the budget as if they woke up from a bender and wondered what they’d gotten themselves into (even though the debt service is supposed to be covered by lease payments from Pardee and Wingate).
Banished from this year’s budgets is park investment. Local government bodies splurged on recreation over the past three years. The county bought the old Hendersonville Christian School, built Tuxedo Park and improved Dana Park and Jackson Park. The Flat Rock Village Council bought the old Highland Lake Golf Club and made the Park at Flat Rock. Mills River invested in walking trails, tennis courts and a canoe dock. Hendersonville got left out because voters overwhelmingly rejected a $6 million bond issue to fund Berkley Mills Park improvements. Unless the city gets a state Parks and Recreation Trust Fund grant prospects of investments are dim. The City Council zeroed out $300,000 for the park. Talk of parks is verboten.
Non-profits are suffering from the tight budgets, too. The county has a passive-aggressive history here. By 2012, the electorate was fed up with the austerity budgets and the anti-school rhetoric and budget-cut lust of Tea Party blowhard Bill O’Connor. After voters fired O’Connor, commissioners made a course correction, generously funding (by their standards) everything from the schools to pet neutering to the Flat Rock Playhouse. Now the same commissioners who voted for those appropriations (minus new commissioner Bill Lapsley, who has plunged into his first budget) are acting as if they have no fingerprints on the largesse. They’re correcting the course correction — overcorrecting, some would say. The School Board may get only a fraction of its request for $2.3 million in new money.

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Budget-crafting this year feels like a missed opportunity.
If the fire tax increases spooked the county commissioners, they have only themselves to blame.
With the enthusiastic assent of the board, Wyatt promoted the four-year approach to budgeting in which the leaders set a tax rate aimed at adequately funding operations, growth in demand and capital projects until the next countywide appraisal. In the past, it has seemed strategic and sensible, even visionary. This year it feels halting and ad hoc.
Politically, the smart play for Wyatt would have been to propose a tax increase to give commissioners room for creative investing. If the commissioners had increased the tax rate by 2 cents, raising an extra $5 million, they would have built in a useful buffer. They could look up from their beer and say yes.
As it stands, they’re setting us up for a new four-year cycle of austerity, counting pennies, looking backward instead of ahead, and forgetting the sense of achievement they felt in April 2014 when they celebrated the rare and welcome occasion of governing well by governing for the greater good.

Reach Hendersonville Lightning editor Bill Moss at billmoss@hendersonvillelightning.com.