Tax-to-fee conversion looking less appealing to city of High Point

High Point City Council is considering a tax cut that would continue to shift the cost of government onto the backs of the poor, while putting aside additional funds to combat blight.

High Point City Council is considering a 1.25-cent tax cut for the FY 2016-17 budget as part of a four-year plan launched under former Mayor Bernita Sims to shift financing of the city’s garbage collection from property taxes to a fee-based system.

At-large Councilman Latimer Alexander argued against the proposal last year before the council voted to reduce the city’s tax rate from 66.4 cents per $100 of valuation to 65 cents. And he renewed his criticism on Monday during a preview of the upcoming budget.

“In essence what we’ve done is we’ve increased taxes on citizens who own property valued less than $285,000, and called it a tax decrease,” Alexander said.

Budget Director Eric Olmedo confirmed that the fee hike costs each household $12 a year — the equivalent of the tax savings for a property valued at $285,000. The swap-out lowers the cost of government for families with properties valued at more than $285,000, while those with less valuable properties end up paying more.

“It’s always nice to say you’re giving the citizens a tax decrease, but what you’re doing is you’re changing your tax to a fee — fees are not deductible off your income tax — and if you own property of less than $285,000, this is a more expensive way of paying for it than the other way,” Alexander said. “I’ve always thought this was the dumbest damn thing we ever did.”

Alexander was elected to his seat in 2014, after a two-year hiatus from council.

Mayor Bill Bencini, who took office with Alexander in late 2014, agreed with his colleague that converting taxes into fees “punishes the low end of the spectrum.”

Olmedo told council that three consecutive years of tax decreases in High Point have resulted in an unintended consequence of causing the city to lose $600,000 in sales-tax revenue, and that if the property tax rate is cut again, the city will forfeit $800,000 annually.

The three consecutive tax cuts have been approved by two separate councils, from the coalition under Sims that took a skeptical view of revitalization efforts to the more forward-looking group headed by Bencini.

Meanwhile, the proposed budget also includes a $1 per month fee increase to raise $1.3 million annually towards debt service on $21 million in stormwater capital projects over the next five years. The five projects, including a $14.3 million investment on Ray Avenue along the north side of High Point Regional Hospital, are all clustered in the hospital area, the tony Emerywood neighborhood and the central business district.

Alexander said after the meeting that what the areas challenged by stormwater runoff have in common is that they’re located in older parts of the city that were built up before developers were subject to regulations limiting impervious surface and managing erosion.

“You’re kind of building the barn after the cattle have wandered into the field,” he said, adding, “It was never engineered to handle it.”

Olmedo said he and City Manager Greg Demko asked themselves why city revenues aren’t growing as fast needs are. The answer, he said, is that that property values aren’t growing quickly enough to keep up with demand for services.

“And some of the things we’re hoping — some of the programs we’re putting in place we’re hoping will increase that property tax assessed value, but that takes time,” Olmedo said. “This year I think we’re just over 1 percent growth in assessed value. It’s just hard to continue operations at current levels when we’re not growing as fast as some other cities are.”

The 2015-16 budget included $500,000 for redevelopment and addressing blight, and the proposed budget for the next fiscal year includes an additional $500,000 for the same purpose.

With less than three months left in the current fiscal year, the city has spent only $65,000 of the allocation for redevelopment. The funds have been spent to bring in three additional code enforcement officers from a private firm to assist two others who are employed by the city. Councilman Chris Williams, who represents Ward 2 where some of the city’s most blighted housing is located, said the inspectors have issued 158 public nuisance citations, along with 401 sign violations and four vehicle violations in the past two weeks. The citations include violations for high grass, junk cars and placard signs that create what he called “eyesores.”

Williams said the city could have immediately spent the $500,000 to demolish burned-out and dilapidated houses, but it would have barely made a dent in the problem. He added that the city is trying to be strategic in addressing blight. A 2015 housing market study on the core city area of High Point by the Center for Housing & Community Studies at UNCG found 31 structures that were candidates for demolition, including 22 with major fire damage.

Williams argued that the city needs to be strategic in tackling blight, adding that any unspent funds from the current year budget allocation will carry over into the next year.

“I see code enforcement in place and aesthetics looking better,” he said. “You’ve increased quality of life in the blighted area. Even if you have a boarded-up house, it needs to meet code.”

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At-large Councilwoman Cynthia Davis questioned the city’s commitment to eliminating blight, citing photographs of deteriorated houses with trees growing out of them.

“How are we going to continue to ignore those?” she said. “I mean, we can throw money at anything and everything else that the majority of this council wants to do, but when it comes to removing houses of blight in neighborhoods where people live every day, which you wouldn’t have in your neighborhood — most of us in this room wouldn’t tolerate it. You wouldn’t want a burned-out house next door to you, whether it’s in Emerywood or any place else. But we have set a bar so low that people have to continue to live that way because we’re sending a message that people don’t matter. And that is not okay.”

Williams pushed back, noting that of the three priorities identified by council earlier this year — addressing blight, retaining millennials and promoting a catalytic project like a ballpark — the city has only committed funds to one: addressing blight.

Councilman Jeff Golden, who represents Ward 1, also took issue with Davis’ charge.

“I’ve seen more effort to address blight in the past year than the 20 years prior,” he said.