City Finances in “Very Good Shape”

By Leslee Kulba- Members of Asheville City Council enjoyed a workshop covering the municipal general fund.

Debra Campbell, Asheville City Manager

For the sake of the innumerate and financially illiterate public, CFO Barbara Whitehorn would talk only with council members about, perhaps, how all computer models had informed selective policies and investment strategies to shape the local Laffer curve for optimized returns on private-sector wealth in anticipated macroeconomic responses to the inverted yield curve. All taxpayers needed to know was the city was in “very good shape.”

Despite ongoing discussions about a $1-2 million shortfall, the city had a healthy fund balance and a lot of debt.

To that, Julia, Obama’s famous low-information voter, might object and exclaim, “The city collects $180 million, has almost $30 million in savings, and $157 million in debt. I owe back taxes, the medical bills are piling up, I can’t pay my student loans, and I’m doing my best to avoid the repo man until one of my employers can make payroll.”

Looking through the city’s “equity lens,” one would logically conclude Julia needs to pay more taxes, and the city needs to float some more bonds for her children to pay off.

Council thinks it’s so smart to take from our marginalized Julia until she cannot afford her own food and housing, they’ve tasked city government with developing and administering a Food Policy, and they’re spending debt on a raft of programs to create more affordable housing for “low- and moderate-income” families.

It’s an awesome way to systematically erode the productive sector, so long as those calling all the shots from the consumptive sector are “eaten last.”

It would not be fair to blame members of council for the nouveau master-slave setup. Council keeps referring to the results of the latest citizen survey, which concluded Ashevillians’ preferred targets for local government spending were: public safety (90%), environmental protection and sustainability (88%), affordable housing (85%), bike paths and pedways (84%), roads (83%), public transportation (77%), food security (71%), youth recreation programs (70%), city parks (68%), public building maintenance (68%), adult recreation programs (51%), and recreation centers (50%).

Members of council were told they had to balance these priorities with available funds and council’s priority “strategies.” Coming out of their March 8 retreat, these were, in order, “implementing phase one recommendations of the Transit Master Plan, developing a strategy for sale or lease of city-owned land to incentivize affordable housing development, expanding partnership opportunities with Asheville City Schools through the Equity Collaborative to eliminate disparities in access to quality schools and other educational resources, developing specific implementation plan and schedule to amend the UDO and ordinances to reflect recommendations in the Comprehensive Plan, developing a business inclusion program to increase minority contractor participation in response to the Disparity Study, [and] reviewing and updating Comprehensive Housing Affordability Strategy with a goal of assessing the effectiveness of the tools and encouraging development of mixed income communities.”

As for the structural budget gap that remains despite years of warnings from former city manger Gary Jackson, Whitehorn said it was first estimated to be $1.8 million this year. Now, it is down to $1.1 million, and it isn’t going to get any lower. One reason for the narrowing was it is now estimated the city will receive $2.5 million this fiscal year and $5 million in future years from sales and property taxes collected from HCA, which has purchased Mission Hospital’s formerly tax-exempt assets.

Original estimates for $5 million now and $8 million recurring had underestimated the number of Mission’s holdings that were outside Asheville and thus not subject to double-taxation. To be safe, though, city staff had assumed zero income from the sale in preparing the budget. Whitehorn indicated the income from HCA would be sufficient to align municipal baseline expenditures with revenues through 2024, but an additional revenue stream had to be identified for any newly-proposed strategic priority programs.

Taking stock, the city had the $1.1 million structural budget gap that wasn’t going away; council’s top priority, implementing Phase I of the Transit Master Plan was going to cost $1.2 million – then, city staff had its needs that weren’t being addressed.

New City Manager Debra Campbell explained council had cast their vote of confidence in her ability to wisely run the city when they hired her, and in her expert assessment, she was going to need additional staff and resources first.

Representing a middle ground reached by staff and management, she requested $60,000 for recurring accreditation training; $50,000 for annual fire department needs, like defibrillators and breathing apparatus that have traditionally been purchased via budget amendment; $200,000 to begin addressing the city’s $330 million capital improvement backlog; $100,000 to develop a solid waste reduction master plan and another $200,000 to develop a plan for programming the still-vacant, city-owned property on Haywood Street; and $79,999, $90,000, and $80,000 to hire a sanitation code enforcement officer, a senior planner, and a sustainability coordinator, respectively.

Council’s Feedback –
Councilor Julie Mayfield, who recently announced her intention to run for state senate, wanted more money for transit. She quickly shifted an inquiry from Councilor Bryan Haynes into how much $1.2 million would do for transit to an attempt to defund a proposed classification and compensation study. Council had not prioritized it, but Campbell rated it “extremely important.”

Asheville was too complex for autopilot. For years, the city has had problems recruiting and retaining professionals with skills for innovation adequate to its unique challenges. It could even be said that, at current pay grades, the city is punishing the best and brightest who stay. Mayor Esther Manheimer said the exodus began during the recession, Councilor Vijay Kapoor described the city’s legal department as “decimated,” and Campbell named Buncombe County as a prime recruiter. She said staff had been stretched too far and too long to deliver the level of quality the community expects and deserves.

Mayfield asked if a study was necessary, and Campbell said defining just compensation required data and “not just my gut.” More cogently, Mayfield asked if the city hadn’t just completed a market rate study. She was told it had, but the results were flawed and not fully implemented. Adjustments made last year were only stopgaps for public safety teams.

Details were not available because – no joke – the study had been conducted under the leadership of a former city manager and human resources director. Campbell, who had been hired midway through the budget process, promised things would be handled “significantly differently” next year. Mayfield asked if the study could wait, but conventional wisdom teaches extending dysfunctionality is wasteful.

Trying additional angles to free up more funding for transit, Mayfield asked if there were not national studies that compiled tables, like those used in the nonprofit sector, listing appropriate pay for the region and other contexts. There weren’t, and Human Resources Director Peggy Rowe reiterated Asheville had a lot of “complexity,” with, for example, its high cost of living, and added, “A lot has changed since 2015-2016.” She and Campbell believed outside consultation was definitely needed; but once baselines were set, policies governing promotion and cost-of-living adjustments would hold their validity a few years.

With that conversation going nowhere, Mayfield next asked if any of the three organizations with which the city collaborates for promoting minority entrepreneurship might pick up the responsibility and tab for helping more minority-owned businesses win city contracts.

Mayfield then moved the discussion back to Haynes’ question. Transportation Director Jessica Morris said one of two options would be taken to reconfigure the city’s bus routes and address on-time performance and missed trips. The master plan called for extending service 40%, but people who depend on the buses for employment and healthcare were saying it was more important that the buses run on-time. City staff and the Transit Committee also named on-time performance as their highest priority.

Campbell said she was a fervent supporter of transit, because it addresses a lot of city needs. However, with limited resources, she was trying to get the most bang for the buck.

When Mayfield asked if the limiting reagent was money or personnel, Campbell replied the city would need more staff, but she didn’t want to do any hiring before there was better clarity on what employees be doing. Because state law forbids municipalities from engaging in collective bargaining, and transit workers belong to the ATU, the city contracts out its transit management. Campbell said the management company would definitely have to hire more drivers and spend more on maintenance, and that would require renegotiation of the city’s contract. The city, in turn, would have to contract for assistance with the negotiation process, as well as for logistical analysis and a study for a new bus maintenance facility.

Aspersions were then cast about council’s record of repeatedly budgeting more money for transit than can be spent. Campbell said she had been in conversations with a consultant, staff, and transit riders, getting up to speed with the “rocky history.” She assured council she had been very careful to first estimate what staff could do this year and then put a price on it. Haynes clarified: If the city were to allocate more than $1.2 million for transit this year, it would not be able to spend it.

In closing, Kapoor asked Campbell to let council know if and when she discovered any of their budgeted priorities was not workable. Manheimer added members of council are often accused of cutting things that staff never elevates to the level of bringing to their attention. She realized many issues filled that bill but asked that council be apprised of the contentious ones.

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