Winston-Salem council considering 1-cent tax hike

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Winston-Salem City Council reviewed the budget last week.
Winston-Salem City Council reviewed the budget last week.

by Jordan Green

Winston-Salem considers tax hike to offset exemption imposed by the state legislature. The city council wants to bring employees up to a livable wage. It’s still the most fiscally conservative city in the state.

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 during a May 29 budget meeting. 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, adding, “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 in the city’s proposed $506.9 million budget would offset the loss of $1.9 million in tax revenue as a result of the state’s decision to exempt proprietary software from taxation. The move is likely to benefit Wells Fargo, BB&T and other corporations that hold a significant investment in information-technology systems to run their operations.

City Manager Lee Garrity relayed more bad news to the city council’s finance committee during a budget meeting on May 29, noting that the state Senate approved legislation earlier in the day 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 on May 29, 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 city of Winston-Salem’s proposed $506.9 million budget also allocates $1.3 million for performance raises 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 city employees’ pay.

“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.