By Emily Ford
eford@salisburypost.com
SALISBURY — City Council members sent staff back to the drawing board Thursday, asking for more proposed cuts as they struggle with the toughest budget in recent memory.
The budget workshop resumes at 10 a.m. today in City Hall, 217 S. Main St. It’s open to the public.
Council praised city staffers for their diligence in preparing the budget, which took hundreds of hours. But at times, elected leaders were frustrated during the nearly four-hour workshop.
When their suggested cuts and cost deferments were repeatedly met with resistance from administrators, an exasperated Councilman William “Pete” Kennedy said staff should present a list of options using their expertise.
“Staff has a better understanding than we do,” Kennedy said. “I want them to go back and see what they can defer and get this tax rate down.”
Both Kennedy and Councilman Paul Woodson said they would not support the tax rate increase proposed by City Manager David Treme.
“I am not voting for 5.2 cents,” Kennedy said.
“Me either,” Woodson said.
Mayor Pro Tem Maggie Blackwell didn’t state a position but suggested many cuts and cost deferments.
Mayor Susan Kluttz and Councilman Brian Miller said they want the tax rate to be as low as possible but will wait to consider all factors before deciding on a number.
Revaluation
The city’s current tax rate is 59 cents per $100 of valuation. Treme’s proposed rate of 64.2 cents would be “revenue neutral,” meaning the city would neither lose nor gain revenue.
The higher tax rate would bring in the same amount of money because the city’s tax base fell 8 percent this year, a result of Rowan County’s revaluation.
But the revaluation means people with lower incomes have even less money, Kennedy said.
Council and staff expressed concern that homes in the $100,000 range held their value better than homes in the $400,000 range. Those who can least afford it would have to pay more taxes if the rate increases, while people with higher incomes will pay less tax on homes that fell in value, they said.
Treme said the county’s revaluation “added insult to injury” when the city was already dealing with a $2.7 million budget gap caused by the poor economy.
Council, however, did not seem interested in taking pennies off the tax rate but making up the revenue with new fees.
“This is not about how we can make them feel good by lowering the tax rate and then … sliding this fee in on the other side to get the same amount of money,” Miller said.
Instead, Miller said he wants to identify cuts that will decrease the city’s total revenue. As proposed, the budget totals $69.6 million.
“I’m concerned that all I hear about is increasing,” Kennedy said. “I’m not hearing anything about cutting. Where can we cut?”
More cuts possible
At times, staff seemed as frustrated as Council.
To reach the revenue-neutral budget, staff already has reduced personnel, reorganized departments, shortened hours at recreation centers, increased health-care costs for employees, cut the fleet of vehicles and more, said John Sofley, assistant city manager for finance.
“What else could we cut?” Sofley said. “At this point, we are talking about the elimination of services entirely.”
The only areas not touched by cuts are fire and police, he said.
“With all the reductions we’ve made, I don’t know what else we are looking at,” Sofley said.
Council had some ideas.
They directed staff to come back today with proposed cuts and more information in these areas:
Technology replacement Blackwell advocated moving from a three-year to a four-year schedule, saying it could save $243,000. Sofley resisted the idea, saying the city would fall behind on scheduled upgrades, and said general fund savings actually would be $113,000.
Blackwell was not dissuaded.
“That’s half a penny off the property tax rate,” Blackwell said. “That’s a start.”
The city has about 375 computers.
Town Creek Park Deferring improvements could save $50,000.
Discretionary fund Blackwell asked staff to itemize the city’s various discretionary funds and give the total amount.
“We will likely ask if those funds have been tapped in the past, so having that information prepared as well would be smart,” she said.
Fund balance Council members want to know the percentage of fund balance.
Garbage collection fee While initially unpopular, Council will further consider a monthly fee per household ranging from $2.20 to $5.
Limb/leaf collection fee Council will consider a $3.74 monthly fee per household, which could knock 1.7 cents off the property tax rate.
Transit Council asked for proposed cuts to the city’s bus service.
Community contributions
Putting it off Kennedy asked for suggestions on how to reduce $1.8 million set aside for replacing vehicles, radios and other equipment.
“We have plenty of new cars and new trucks out there,” he said. “I think we can defer that to another year.”
Sofley added it to the list but said, “We could have a long discussion on that, about what we have deferred already.”
Garbage fee?
Council members were averse to any additional cuts to personnel, salaries or benefits.
The budget already includes an 8 percent cut to personnel — the elimination of 36 full-time and 11 part-time positions, including four layoffs — and a hiring freeze for non-essential positions.
Employees with family coverage will pay about $50 more per month for health insurance.
Although eliminating the city’s 3 percent match for employee 401K funds would save $324,000 and cutting out a 1 percent Christmas bonus would save $157,000, council members said they want to look elsewhere for cuts.
“I don’t want to lose our quality staff,” Blackwell said.
Council did not embrace garbage collection users fees. Assistant City Manager Doug Paris proposed the fees as a way to make trash service more equitable.
The fee would distribute the cost of the service equally among those who use it, he said. Spencer, Granite Quarry, East Spencer and the majority of other towns in North Carolina have garbage collection fees, he said.
If Council wants to reduce the property tax rate, the fee would provide another revenue source, he said:
• $2.20 per month equals 1 cent off the property tax rate
• $4.40 per month equals 2 cents off the rate
• $5 per month equals 2.2 cents off the rate
But Blackwell pointed out that people would pay more for garbage collection than they are saving on their property taxes.
One penny off the tax rate saves the owner of a $125,000 house $12.50 per year. Garbage service at $2 per month would cost the same homeowner $24 per year.
“Once again the little man is carrying the burden here,” she said.
Leaf and limb pickup
Council tentatively agreed to not cut or reduce leaf and limb pickup, a popular weekly service that costs the city about $400,000 a year to provide.
“In the past we haven’t had that service as regularly, and the citizens get very upset with stuff sitting out two weeks and the problems it causes,” Kluttz said. “We’ve been down that road.”
Woodson agreed.
“That would be one tough thing to sell,” he said.
Miller said all options should be on the table for debate and asked staff to propose a user fee for the service.
“I’m not saying I want to cut this or that,” he said. “I want to know what the options are.”
Kennedy was opposed to the user fee, saying it still represented an increase to consumers, even if the city lowered the property tax rate as a result.
Buses and parks
The city contributes about $400,000 annually for the public bus system, and that doesn’t include matching funds for the Lash Drive Connector service, should the city win a grant.
Increasing the cost to ride the bus — now $1 for most and 50 cents for the elderly and disabled — will result in a 10 percent to 20 percent in a decrease in ridership initially, Transit Director Rodney Harrison said. Over time, ridership levels would increase, he said.
Raising the fee 20 cents would generate $19,000, Public Works Director Tony Cinquemani said.
The city tried doubling the fee several years ago, and “citizens were outraged,” Kluttz said.
The only other cost-saving measure is cutting bus routes, which would prevent people from getting to work, Sofley said.
Parks and recreation has given up two full-time positions and 11 part-time summer workers, meaning fewer summer camps and shorter hours of operation for several recreation centers, Director Gail Elder-White said.
Closing centers makes little financial sense because the savings, about $100,000, is minimal and the city still has to keep up the buildings and mow the grass, Sofley said.
Nonprofits
Treme recommended an across-the-board 10 percent cut for nonprofit organizations that receive city funding. He asked Council to weigh in.
They restored full funding to Rufty-Holmes Senior Center — $58,000 — saying the organization takes pressure off the city’s Parks and Recreation Department, and agreed to treat Downtown Salisbury Inc. differently than other nonprofits, since is it a quasi-governmental agency that has a tax district.
They also restored $22,000 in facade grant funding.
While council members agreed to fund the Rowan Arts Council at $40,500, a 10 percent cut, they will hold the money in escrow until the council reorganizes. No one is currently in charge of the group to receive the money and disperse it to Waterworks, the Salisbury Symphony and Piedmont Players, Blackwell said.
City dollars must go through an umbrella agency to obtain matching funds from other sources.
Holding the money in reserve might encourage the Rowan Arts Council to reorganize effectively and inspire the “big three” arts groups waiting for the funds to turn up the pressure, Kluttz and Blackwell said.
After the nonprofit discussion, Blackwell noted Council had just added $17,850 back into the budget they are trying to cut.
Sidewalks
The only other requested expenditure came from Kennedy, who asked staff to find $71,000 to pay for sidewalks on Old Wilkesboro Road. He has requested the sidewalks annually since he was elected 18 years ago.
Treme said the city has identified grant funding for the project, available in one or two years. Kennedy said that’s too late.
“I would like to see them before I go,” he said.
Kennedy later said he hasn’t decided whether he will seek re-election in November, when all council seats are up for grabs.
Contact reporter Emily Ford at 704-797-4264.