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Carlee Proposes Property Tax Raise, Service Cuts To Close Budget Gap

charmeck.org

City Manager Ron Carlee has recommended the Charlotte City Council raise property taxes, as one part of a multi-faceted solution to deal with a budget gap larger than in any single year of the recession. But most homeowners would actually pay less, Carlee says.

State tax cuts and a county property reappraisal cost the city $30 million it expected to have for its General Fund next year, or about 5 percent.

Carlee presented City Council with a recommended budget last night that includes an array of cuts and fee increases, some relatively painless, some more onerous.

“We have significant expense reductions, service cutbacks, fund transfers, fee changes,” Carlee said.

Those include reducing staff travel, office supplies, and printing costs, as well as eliminating almost 100 currently unfilled city positions from the budget, which—among other things—will slow street repairs and resurfacing and de-staff 311 on holidays and weekends.

Carlee also proposed increasing planning, zoning, and other business inspection fees, which the city has subsidized since the recession. He also called for raising water and sewer rates by almost 3 percent, as well as storm water fees for the heaviest users.

“But, at some level this budget is very much about taxes,” Carlee said.

His budget raises the city property tax rate by a little under two cents, for each $100 in property. That was essentially off-the-table just a couple of months ago, with several council members opposed to any increase.

Carlee argued it makes sense because property values have fallen, after an appraiser redid Mecklenburg County’s botched 2011 revaluation.

“If values go up, you bring the rate down; if values go down, you bring the rate up,” Carlee said.

But the rate would go up further than the lower property values warrant, high enough to replace another fee that homeowners pay—a flat $47 trash fee. Carlee wants to eliminate that fee. He says even with the higher property tax, homes valued under $267,000 would pay the city less overall.

“Interestingly, this change and the way that it is structured and proposed would lower the cost on 80 percent of single family homes,” Carlee said.

Businesses would pick up the cost—they would not get their trash fee cut while still paying the higher property tax rate, as well as higher fees. Carlee says that’s because every business in Charlotte already received a tax cut, when state lawmakers eliminated the business privilege license tax. The loss of that tax revenue comprises the bulk of the city’s budget hole, $18 million.

The higher property tax would create one other side effect—a possibly enjoyable one for city leaders who blame Mecklenburg County for some of their budget woes. The city gets a larger cut of the county’s sales tax.

“The higher the property tax rate is for the city, the more sales tax distribution we get,” explained interim budget director Kim Eagle. “If the property tax rate goes up, to the recommended amount the city manager put forward tonight, we’ll see additional revenue of about $2.2 million.”

That wouldn’t kick in until next year’s budget, but then it would give Charlotte more fiscal breathing room.

Council members didn’t stick around to give their thoughts on the property tax increase or the rest of the proposed budget. But they’ll start giving Carlee official feedback at the next budget meeting, Wednesday.