At a budget work session this afternoon, Charlotte City Council reviewed a number of staff proposals to address a budget deficit for FY 2016 that has ballooned to $21.7 million due to an larger-than-expected $2 billion drop in property valuations and the loss of the Business Privilege License Fee, which the General Assembly eliminated last year.
While no fee increases were presented at today’s budget workshop, city staff told members of a Development Services Advisory Committee in a separate meeting that residential land development permit fees could increase by as much as 19 percent, commercial permitting fees by 24 percent, commercial plan review fees by 27 percent and rezoning petition fees by a whopping 300 percent. These fee hikes would help the city achieve 100% cost recovery for the provision of these services to developers.
The ideas presented to City Council at the budget workshop included eliminating unfilled, frozen staff positions, reducing travel and training costs for staff and council members, and cutting funds for community organizations like the Arts & Science Council. Service reductions, job cuts, and property tax increases are also on the table, but discussion was deferred until the next workshop, set for Friday, April 17th at 1:30 p.m. Potential development fee increases are also expected to be presented at that time.
City Manager Ron Carlee stressed that none of the suggestions were set in stone, but a starting point for discussions in advance of a formal budget recommendation that would be presented at the beginning of May.
Councilman Greg Phipps, chair of the Council Budget Committee, said a recent meeting with Mecklenburg County Tax Assessor Ken Joyner revealed that the consultant conducting the revaluation process had left commercial properties until last, producing a far larger gap in tax revenue than expected. A number of Council members were angry with that explanation, arguing that County officials should have notified them sooner that the property tax digest would be far smaller than originally forecast when the revaluation began.
“The consultant should have been able to anticipate that they were putting a lot of the tough stuff right to the very end,” said Councilman Ed Driggs, “and should not have sent out a signal that we were within half a percent (of projected value). We don’t have a good explanation for the public, and we don’t have a way of providing assurances that none of this can happen again.”
With the next property revaluation not scheduled until 2018 at the earliest, the City will have to work with the smaller tax digest for at least the next three years. The North Carolina General Assembly is looking at a variety of bills that would address the authority of local governments to collect and retain sales taxes, but no substantive debate has begun on the proposals.
The public hearing on the budget will take place Monday, May 11th at 5:30 p.m., with the budget scheduled for a final vote on Monday, June 8th.
REBIC will meet with city officials in the next week to discuss the proposed fee hikes and ways to mitigate the impact on the development industry.