Winston-Salem City Council considering 1-cent tax increase

The Winston-Salem City Council is considering a 1-cent tax increase to offset an exemption for proprietary software from property taxes enacted by the state General Assembly.

Anticipating further assaults on local revenue courtesy of the Republican-controlled state legislature, some council members would like to go further.

“Frankly, I cringe every time I see our graph about Winston-Salem being the cheapest place in the state,” said Councilwoman Molly Leight, who represents the South Ward. She suggested a tax increase of 1.25 cents per $100 of valuation would help the city cover the cost of pay raises and assist SciWorks with a planned move downtown.

Councilman Jeff MacIntosh, who represents the Northwest Ward, said the council has a unique opportunity to boost revenues this year.

“I think we have an opportunity right now,” he said. “Next year we’re going to get hit by the state again, and the following year will be an election year.”

Councilwoman Denise Adams, who represents the North Ward, said she concurred.

But Councilman Derwin Montgomery, who represents the East Ward, said he holds some reservations. While he said he doesn’t disagree with the points made by his colleagues, he said he is concerned about how a larger tax increase would be received by property owners when a bond referendum is on the ballot in November that will require a future tax increase of 2 cents to finance debt service.

The 1-cent tax increase proposed by City Manager Lee Garrity would offset the loss of $1.9 million in tax revenue from the exemption for proprietary software.

Garrity relayed more bad news to the city council’s finance committee during a budget meeting this afternoon, noting that the state Senate passed approved legislation today to completely repeal the privilege license tax, which would reduced revenue to the city by $2.5 million in the 2015-16 fiscal year.

“It made me think about something Maya Angelou said,” Garrity remarked. “She said, ‘If you don’t like something, change it. If you can’t change it, change your attitude.’ We’re going to have get creative and adapt.”

The bill rapidly moved through both houses today, and was signed into law by Gov. Pat McCrory. The legislation passed with wide bipartisan support, with only Sen. Gladys Robinson (D-Guilford), Rep. Pricey Harrison (D-Guilford) and Rep. Evelyn Terry (D-Forsyth) opposing it. Sen. Earline Parmon (D-Forsyth), Sen. Trudy Wade (R-Guilford) and Rep. Alma Adams (D-Guilford) were marked as excused absences.

The $506.9 million budget proposed by City Manager Lee Garrity also allocates $1.3 million to pay for raises to reflect performance and to bring employees up to market rate, while increasing the minimum hourly rate from $9 to $10.10.

Councilman James Taylor Jr., who represents the Southeast Ward, expressed support for raising pay for city employees.

“We can lead by example and make sure we pay our employees a livable wage,” he said. “And I think this $10.10 is a good start.”

The proposed budget also includes a 4.5-percent water-rate hike and a 6.7-percent increase in the sewer rate, which were adopted by the City-County Utility Commission.

Winston-Salem has the lowest municipal service cost per customer of the state’s five largest cities, according to a graph presented by Assistant City Manager Ben Rowe, at $1,594 per person, including property taxes, water/sewer rates, solid waste fees and stormwater fees. The most expensive city, Durham, costs $1,776 per customer. Greensboro is the second most expensive city, at $1,691 per customer.

UPDATE, May 30, 10:12 a.m.: The decision by Gov. Pat McCrory and the state General Assembly to eliminate the privilege license tax will cost the city of Greensboro $3 million, according to a press release from the city this morning.

Mayor Nancy Vaughan says in a prepared statement: “I’m disappointed with how this bill materialized and how quickly it moved through the North Carolina House and Senate, seemingly without regard for how it will negatively impact local governments and taxpayers. Members of Greensboro City Council visited Raleigh this week in an attempt to provide insight into how this law could affect our city. We expected the legislature to at least consider $100 cap on the privilege license. I am extremely disappointed in the fact that this final version of the law ultimately takes away a traditional local government revenue source and decision. Unfortunately, in Greensboro, this will leave us with over $3 million to replace in the 2015-16 budget. The only way to do that is to raise property taxes or cut services, so this law could have a significant impact on Greensboro’s residents.”