Tough Winston-Salem budget preserves nonprofit funding

by Jordan Green

UPDATE: The Winston-Salem City Council’s finance committee whittled down the proposed tax increase to 1.6 cents per $100 of property valuation through elimination of vacancies and reduction of force, among other measures, and withdrew plans to raise bus fares and to add Sunday bus service. The finance committee’s recommended budget goes to the full council for a final vote on Monday.

ORIGINAL: Vickie Kelley was one of two brave citizens who turned out for the Winston-Salem City Council’s budget hearing at City Hall last week to plead against a proposed property tax hike amidst a dozen or so nonprofit executive directors and board members who came to thank the city council for maintaining funding for their respective agencies that provide programming in arts and sciences, and help poor people and veterans with housing.

Kelley said she worked 29 years at Douglas Battery before being laid off. She enrolled at Forsyth Tech to retrain and collected unemployment benefits for awhile. Then she took a job at Corning Cable for $7.50 per hour, but wasn’t earning enough to keep up with her bills. She has scrapped metal to make ends meet. Now she earns a $10.41 hourly wage at BE Aerospace, but fears that she’ll be laid off and replaced by a unionized worker.

Her house off of Clemmonsville Road holds a tax value of $51,000, she said. As a result, $242.23 of her total tax bill goes to the city of Winston-Salem, to pay for police and fire protection, roadway maintenance and other services.

The city council is poised to raise taxes by 4.2 cents per $100 of valuation, from 47.5 to 51.7 cents, at the recommendation of City Manager Lee Garrity.

“You’re putting a burden on a lot of people — a lot of older people that live on fixed incomes,” Kelley said. “I’ve worked all my life trying to get my house paid for and then it’s just property tax increases and they raise the value of your property.”

The proposed property tax hike would add $21 to Kelley’s tax bill. Councilman James Taylor, who is Kelley’s ward representative, told her after the hearing that he has not voted to raise taxes in the two budgets he’s handled in his first term on council, but he is considering supporting a tax increase this year. He pledged to listen to constituents and challenged her to name a city service she would recommend cutting.

For taxpaying citizens looking for places to cut the budget, it might be tempting to look to the community agencies funded by the city for savings.

The city spends $780,780 on grants to nonprofits, in addition to $86,250 for the Housing Finance Assistance Fund, a special revenue fund that the proposed budget document describes as being “required by legal mandate or sound financial management practices.” Other grants to nonprofits come from federal funds approved by the city.

Grants to the community agencies that are directly supported by local taxpayers include the Arts Council of Winston-Salem and Forsyth County ($247,540), SciWorks ($170,630), National Black Theater Festival ($73,130), RiverRun International Film Festival ($36,570), Piedmont Triad Research Park ($40,000) and the YMCA Youth Incentive Program ($61,430).

All taxpayer funds earmarked for community agencies equal 0.4 cents in the tax increase. In other words, were all grants to be eliminated, the city would still have to raise taxes by 3.8 cent to maintain essential services and make up the revenue shortfall.

The proposed budget maintains the current level of spending on grants for community agencies, but includes a $12,500 grant to Reynolda House Museum of American Art to bring the Smithsonian exhibit Romare Bearden: A Black Odyssey to Winston-Salem in the fall.

Representatives of the Arts Council, Reynolda House, SciWorks, the Experiment in Self Reliance and the YMCA requested that council maintain funding for their organizations.

Ciat K. Shabazz, executive director of Harry Veteran Community Outreach Services, asked council to increase funding for $13,000 to $15,000 for her agency. The recommended allotment comes out of the Housing Finance Assistance Fund.

“All of you know that there was a drawdown, and as a result of the drawdown from Iraq, we have many veterans returning home from Iraq who are devastated by their deployments — two and three terms,” Shabazz said. “On top of that we have veterans who had been in need of services.”

Shabazz said the additional $2,000 would be used to establish a veterans assistance fund until the NC General Assembly passes voluntary state tax check-off to cover the need.

“You have before you a very difficult budget,” City Manager Lee Garrity told council. “We never take it lightly when we propose a tax increase.”

Most of the justification for the tax increase during the hearing came in the form of a video presentation featuring Marketing and Communications Director Ed McNeal.

McNeal said that to reduce the budget without negatively impacting services, the city has already implemented hiring freezes, imposed departmental budget cuts, eliminated vacant positions, postponed employee pay increases and cut back on replacements of vehicles and equipment. He added that taxpayer-funded city jobs have diminished from 1,915 five years ago to 1,856 today.

On the revenue side, the city expects to take a hit when the county reassesses property values next year. And McNeal said the city is losing $1.5 million in federal stimulus funds that has been used to pay police salaries with the expiration of federal stimulus funds.

The budget includes $3 million for sidewalk and street resurfacing projects. It also includes a 1.5 percent merit increase for city employees, in part to offset higher healthcare premiums, McNeal said.

The city is pitching the tax hike as covering three specific areas: Out of the total 4.2 cents, 1.7 cents would raise $3.5 million to generally support city services, 1 cent would replace $2.1 million in revenue from inventory taxes was outlawed by the General Assembly, and 1.5 cents would help rebuild the city’s mass transit fund by raising $3.1 million.

The budget takes a carrot-and-stick approach towards mass transit, extending service to Sundays while imposing a 30-percent fare hike on riders. The addition of Sunday service, which would bring Winston-Salem in line with neighboring Greensboro, earned council the thanks of Bobby Wilson, who has long advocated for the improvement.

But staff estimates that the 30-cent fare hike is likely to result in a 12.6 percent decrease in ridership. Meanwhile, as Winston-Salem considers a base fare increase from $1 to $1.30, Greensboro is on track to raise fares from $1.30 to $1.50. Meanwhile, Piedmont Authority for Regional Transportation, which provides bus service between Triad cities, is reducing service to cope with declining revenue.

Winston-Salem’s mass transit fund, which subsidizes bus service, contained $3.5 million five years ago but is expected to be depleted by the end of the month, McNeal said.

“Our bus system is underfunded,” said Councilman Dan Besse, a longtime transit advocate who represents the city’s Southwest Ward. “It’s underfunded because we have cheaped out in our local support.”

Besse opposes the fare hike, arguing that it would increase wear and tear on city streets through increased automobile trips, worsen air pollution and ultimately impose a cost of $263,945 per year on the public in the form of street maintenance, storm-water management and parking.

Besse said the fare hike would impose an unfair burden on bus riders, who tend to be at the lower end of the income spectrum. The councilman calculated that a rider dependent on the bus as her primary transportation would pay $120 more per year. That assumes 400 trips per year, or using the bus roundtrip 200 out of 265 days. That compares to a property tax increase of $42 for someone who owns a $100,000 home and $84 for a $200,000 home.

“You would have to own a $300,000 home before the tax increase affected you as much as this fare increase is going to affect the riders,” Besse said.