Charlotte’s budget woes could spark another fight over the second phase of the streetcar, which will cost the city $75 million.
Republican council member Kenny Smith has said the city needs to re-examine previous budget commitments, including the streetcar.
The city has lost about $32 million in revenue due to two factors: The legislature’s repeal of the Business Privilege License tax ($18.1 million) and the ongoing countywide property reevaluation ($14 million).
Losing $32 million is significant. That’s just under 6 percent of the city’s $580 million general fund.
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The city has reclaimed some of that money from an increase in sales tax revenues and the addition to new commercial and residential property on the tax rolls. In addition, the city has proposed some budget cuts, including a pay freeze and a 1 percent across-the-board cut to all departments.
That brings the expected shortfall to $15.6 million.
The city hasn’t said how it will make the additional cuts.
“It has to be on the table,” Smith said Friday about the streetcar. “It’s one of the biggest line items in the budget. It can be a short-term solution.”
The city is finishing the first phase of the streetcar line, which will run from Time Warner Cable Arena to Novant Health Presbyterian Medical Center. That small 1.5-mile line will open this summer.
The second phase will extend the line in two directions – to Johnson C. Smith University to the west and the Elizabeth neighborhood to the east.
The city recently was recommended for a $75 million federal grant in President Obama’s budget. The city’s share of the streetcar would be $75 million.
Streetcar critics, including Smith, are likely to question the merits of moving forward during the budget crisis.
But supporters are likely to also push back. Using streetcar money to balance the fiscal year 2016 budget could jeopardize the $75 million grant.
When asked about the streetcar, City Manager Ron Carlee said the city “will not be responding randomly to various budget ideas that are generated. We are methodically reviewing all options.”
There are four council members who have, at one time, cast at least one vote against the streetcar: Republicans Smith and Ed Driggs; and Democrats Michael Barnes and Claire Fallon.
Democrat Greg Phipps has supported the project, but was against using property taxes to pay for it.
But a majority of council members – Democrats David Howard, Vi Lyles, Patsy Kinsey, John Autry, LaWana Mayfield and Al Austin – are adamant supporters of the project.
At Tuesday’s budget meeting, Howard tried to brush off Smith’s suggestion of revisiting projects. He said the city’s focus should be on Raleigh and convincing legislators that the city needs a replacement for the business tax.
Autry said Friday “there are other ways to cut 4% that won’t have a negative impact on growth.”
It’s possible the city could look for different short-term solutions and hope the General Assembly replaces the business license tax next year. The city has some new debt capacity that’s part of this decade’s $800 million capital spending plan. That money could be rolled into the operating budget.
One challenge will be finding potential cuts that don’t further impact police and fire, which make up more than half of the general fund budget.
“I have no intention of cutting police and fire,” Barnes said.