Three months after an effort to pass a nearly $1 billion capital budget disintegrated, Charlotte Mayor Anthony Foxx wants City Council to try again and explore thorny issues such as a property tax increase and possibly paying for a streetcar.
Council members are set to discuss a capital spending plan Sept. 27, a highly unusual time for budget meetings, which typically don’t happen until late winter or spring. Their task is to find a budget that can get the needed six votes to pass, a process made all the more difficult because 2013 is an election year. The council won’t vote on the budget until June.
Some council members are hesitant to ask voters to approve hundreds of millions of dollars of new projects – along with a property tax increase – at the same time their names are on the ballot.
In a letter to council members sent Friday, Foxx said it’s important to pass a capital plan because “Charlotte’s clock is ticking.”
“Our roads and bridges will not get better, our neighborhoods will not become safer, and our AAA bond rating will not be preserved without action,” Foxx wrote.
In early 2012, City Manager Curt Walton unveiled a bold capital spending plan to carry the city through 2020.
Historically, city capital programs featured run-of-the-mill projects such as roads, bridges and sidewalks. This plan was different.
With a cost of $926 million, Walton’s plan invested heavily in the city’s poorest neighborhoods and featured what the city called “transformative” projects. There was $199 million for a streetcar and $25 million to transform Bojangles’ Coliseum into a hub for amateur sports. In addition, there was $35 million to link bike and walking trails for a continuous greenway cutting through the city.
The plan needed an 8 percent property tax increase – 3.6 cents for every $100 of taxable property.
When the budget was discussed in the spring, council members were mostly silent, offering little or no opposition. But when the plan was voted on June 11, six members had second thoughts about the tax increase and shot down the plan in a stunning vote.
Over the next two weeks, those six council members, led by Democrat Michael Barnes, offered up a smaller plan of $660 million in spending that would only raise the property tax rate by 2.44 cents – the same amount as a Mecklenburg County tax decrease in 2012. That proposal would have allowed council members to say that a property owner’s overall property tax bill didn’t go up.
But Foxx vetoed that budget, saying it didn’t do enough for the city. He argued that Walton’s capital plan had several connected parts and that Barnes’ proposal removed too many of them. It wouldn’t give the city enough bang for its buck, Foxx said.
Now the mayor wants to bring council members back to the table.
There are several challenges to passing a capital plan for a bond referendum in November 2013.
• It’s an election year.
This spring, Democrat Patsy Kinsey said she didn’t think council members would vote to raise taxes in an election year. Council members could choose to push the issue off again for the next City Council, which could raise taxes and hold a referendum in 2014.
Foxx has acknowledged that it will be politically difficult to raise taxes in 2013, but he said it’s not impossible.
• A second Mecklenburg County tax decrease is unlikely.
Earlier this year, Mecklenburg County approved a budget that lowered its property tax rate by 2.44 cents. City Council members believe that’s unlikely to happen again in 2013, which means any city property tax increase wouldn’t be offset by a county decrease.
That could make Republican support more difficult.
Earlier this year, the council’s two Republicans – Warren Cooksey and Andy Dulin – agreed to support a smaller capital plan so long as it didn’t raise taxes by more than 2.44 cents.
Cooksey said he will press council members this year to put any tax increase before voters.
“We are in very new territory now,” Cooksey said. “Is it fair to voters to raise taxes first and then say you might as well vote for the bonds because we’ve raised taxes?”
• The streetcar.
The most controversial part of Walton’s capital plan was $119 million for a streetcar extension. Barnes said he voted against the capital plan because he didn’t want property taxes to pay for it, and other council members, including Mayor Pro Tem Patrick Cannon, were wary of the project.
On the other hand, the streetcar has some staunch advocates, including Democrats Kinsey, John Autry and David Howard.
Barnes said he wants the city to explore finding other pots of money to pay for it, including possibly using hospitality tax money from hotel/motel occupancy taxes. His hope is that the streetcar could be considered a “tourism” project because it would link several uptown attractions, helping visitors get around.
Foxx said he’s open to that possibility, but isn’t sure if it’s legal for hotel/motel taxes to be used for the streetcar.
Other options include levying a special assessment on property owners who would benefit directly from the streetcar.
Other parts of the plan that have been considered for removal by council members include road improvements west of Charlotte Douglas International Airport to accommodate growth from an intramodal rail yard; public-private partnership money to revitalize Independence Boulevard; affordable housing; and money to invest in a so-called UNC Charlotte “Innovation Corridor.”
• Approving a comprehensive plan.
In a letter to council members sent Friday, Foxx said he would veto a capital plan that doesn’t do enough.
“I do not support raising taxes simply to raise taxes,” Foxx said in the letter. “That’s why I vetoed a budget alternative earlier this summer and will do so again if it comes back in similar form.”
Foxx said he would veto an eight-year capital plan that raises taxes by 2.44 cents, saying it wouldn’t provide enough capital improvements. He said he would consider a five-year plan with a tax hike of 2.44 cents.
