Charlotte may scrap the $47 garbage fee homeowners pay in favor of a property tax increase, as one way of closing a $21.7 million budget gap.
City Manager Ron Carlee said most homeowners would save if that change is made. But people with homes valued at $313,500 or above would pay more. In addition, commercial properties would pay more because they don’t pay the solid waste fee today.
Eliminating the fee in favor of a 1.5 cent tax rate increase would bring in an extra $4.5 million for the coming fiscal year, which begins in July. That would reduce the shortfall to $17.2 million.
Part of the city’s budget challenge has arisen because the General Assembly repealed the business privilege license tax, which cost the city $18.1 million in lost revenue.
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Carlee said the city was looking to recover the money lost when the business tax was repealed. The problem, he said, is that raising the property tax rate also would hit residential homeowners.
“How can we deal with that dilemma when we can’t do different tax rates?” Carlee said at a budget meeting Friday.
The city said the current fee is a “regressive tax,” meaning that low-income residents pay the same as wealthy homeowners.
At-large council member Michael Barnes, a Democrat running for mayor, questioned the plan.
“I need to see a scenario in which we cut our way out,” Barnes said. “I have no intentions of supporting a tax increase.”
At-large council member David Howard, a Democrat also running for mayor, defended Carlee’s proposal.
“You aren’t being fair to the process,” Howard said aid about criticism of Carlee’s plan to substitute the fee for a tax rate increase. “That part bothers me. We go running for the doors when we hear about a tax increase.”
Other areas being considered to close the budget gap:
▪ Carlee has outlined $3.99 million in cuts to city departments. Earlier this year, the city had considered an across-the-board 1 percent cut to all departments, which would be about $6 million.
The new cuts would be more targeted.
For instance, the City Council and mayor’s budget would be cut by nearly $51,000. That’s 17.6 percent of their budget that isn’t spent on their salaries.
That could force a cut in how much money they spend on travel and other expenses, which was more than $120,000 in 2014.
The police department would lose $755,000, which is 2 percent of its budget that isn’t spent on employee salaries and benefits. The fire department would lose $179,600, 1.3 percent of its non-personnel budget.
Republican Ed Driggs asked if the city could cut more.
“It’s hard to accept that there is no more that we can find,” Driggs said.
Carlee said that the city budget is already tight, as Charlotte continues to recover from the 2008 recession. Carlee has said the city would likely implement a pay freeze for the coming year, but Friday he said he wants council members to consider some pay increase.
▪ Fee increases. The city has 327 fees, many paid by developers. Carlee has said the city could increase 66 of those fees to better reflect the cost of providing that service. That would raise $1.8 million.
Mayor Dan Clodfelter said the city has historically turned to fees to avoid a property-tax increase.
After outlining a number of cuts, Carlee said the city anticipates a shortfall of between $5 million and $7 million. He hasn’t said how that gap would be closed.
Carlee’s budget proposal keeps the streetcar intact.
The first 1.5-mile phase – from Charlotte Transportation Center to Novant Health Presbyterian Medical Center – is scheduled to open in June. That will cost the city about $1.5 million in operating costs.
After that, the city is preparing to expend the line by 2.5 miles, which would cost an additional $63 million in construction costs and additional $4.7 million in operating costs.
Carlee said he wants to create a special transit fund that doesn’t include property taxes, though.
“Can you use this for something else?” he said. “Yes, you can. There is absolutely no question about it.”
The manager added: “We have not proposed or do not intend to propose defunding any capital project that has been funded.”