County Manager Calls for 1.2% Tax Rate Cut: Jones Recommends $10 Million Increase for CMS

By Carrie Levine, The Charlotte Observer, N.C.

May 17–Mecklenburg County Manager Harry Jones called for a 1.2 percent tax rate cut Tuesday, the direct result, he said, of new state lottery money.

Jones recommended a $1.34 billion budget, an 8.2 percent hike over last year.

The proposed tax rate cut comes a year after county commissioners increased the rate by 10.6 percent. Much of the added money went to Charlotte-Mecklenburg Schools.

This year’s proposal would add $10.4 million more for CMS, about a third of the school system’s requested increase.

School officials said that isn’t enough, and could force deep cuts to the classroom. Some Democrats, who hold a majority on the nine-member county board, said they will consider giving more.

County commissioners will make final budget decisions next month. The board’s six Democrats have said they want to avoid a tax rate increase. The three Republican members have called for a 3-cent tax rate cut this year, with additional cuts over the next two years. Jones said he thought about proposing a larger rate cut, but said he wanted to be cautious about depending on lottery money, since this is its first year. State and local officials say Mecklenburg can expect roughly $18 million from the lottery, but Jones said he wants to be sure those projections are correct before he budgets all the money.

Jones said he also thought CMS needed an increase to offset student growth.

“The choice I had was, there were some other services I would have said I wanted to reduce,” he said. “I could have gone further, but I elected not to do that.”

Instead, Jones said he preserved much of the funding in last year’s budget, kept up with increased costs for mandatory things such as Medicaid payments (projected to rise by $4.7 million) and added services such as more school nurses and restaurant inspectors.

Increased revenue

The county is also carrying over a surplus of roughly $21 million, mostly as a result of increased property tax collections and sales tax revenue.County officials say the spike in property tax collections happened because of new collection efforts. Also, officials said the value of the county’s property tax base grew by more than they projected. The surplus amount also includes money from property tax appeals from prior years that have been settled.

The bump in sales taxes was more than officials expected because they base their forecasts on prior years.

Also, the county’s budget staff is deliberately conservative to prevent any deficit.

The county expects sales tax revenues to continue to rise in the next year. Also, the county expects a 3 percent growth in the tax base and more interest on the county’s investments. Those factors — combined with the surplus — means the county will add roughly $63.4 million next year that it didn’t have this year.

This week, county officials said they had reached a back taxes settlement with US Airways for $4.9 million. That amount isn’t included in that number.

The county also isn’t including the projected $18 million lottery money in their revenue projections. They are counting on roughly $9 million of that to offset the proposed property tax cut. Jones said he will recommend earmarking any more than that for future school capital expenses.

Elected leaders respond

County commissioners had few comments Tuesday night, saying they had to study the proposed budget.

Commissioners Chairman Parks Helms, a Democrat, said the 1.2 percent tax rate cut seems possible. Board members may choose to move money around in the budget — possibly to give a larger increase to CMS — but keep the total the same, he said.

And three other Democrats said the board should at least look at CMS funding guidelines the county developed over the past year. Those guidelines consider what it costs to educate students with disadvantages, such as limited English skills. It would call for a larger increase to CMS, closer to $25 million.

“There’s a big gap” between what school officials asked for and what Jones recommended, Democrat Wilhelmenia Rembert said.

But Republican Dan Bishop said the county’s revenue this year should prompt a bigger tax rate cut.

“We were too reticent in proposing to cut 3 cents from the tax rate,” he said.

School officials said Jones’s $10.4 million recommendation would force them into tough cuts that could hurt classroom instruction.

School board chairman Joe White said if CMS does not get the proposed increase, the school board must make some “extremely tough decisions.” CMS interim Superintendent Frances Haithcock said roughly 85 percent of the school system’s proposed $1 billion budget would go to pay salaries.

But Jones said CMS must change its budget process to help the public understand the school system’s priorities. He said one factor that shaped his recommendation was a poll showing citizens don’t trust the district’s financial management. Jones said he doesn’t believe cuts have to hit the classroom.

“When you’ve got a billion dollar budget, that’s not a credible response to me,” he said.

Budget highlights

Besides the $10.4 million for CMS, Jones is proposing:– A 0.71-cent cut in the tax rate for unincorporated residents on the law enforcement tax;

— $500,000 to pay for consultants who would help CMS evaluate two recommendations from the CMS Task Force, and $1.3 million for the final year of the High School Challenge grant;

— $610,000 for the court system. The money would pay for two new assistant district attorneys and support staff to concentrate on felony prosecutions.

It would also create administrative positions in the county manager’s office. Jones said those workers would oversee and monitor the criminal justice system and try to improve its efficiency.

Court officials have long complained they need more money from the state. This year, District Attorney Peter Gilchrist asked the state for $3.1 million in new positions, and asked the county to pay the cost if the state said no.

Because of the funding, court officials say cases take too long to get to court and prosecutors are forced to make plea deals, even with serious criminals.

— $2.6 million to operate the new county courthouse at Fourth and McDowell Streets. The building is expected to open this winter.

— $267,000 to reduce the waiting list for domestic violence services and Women’s Commission counseling. A report earlier this year said waits for services have grown.

Jones is also recommending $100,000 to add shelter for domestic violence victims, and study whether the county needs more emergency shelter beds or transitional housing.

— $4.4 million for pay-as-you-go construction. Last year, county commissioners agreed to set aside roughly $22 million to pay for construction projects as they’re built instead of borrowing money for them. This year, Jones is recommending roughly $26.4 million for that account, which he said will eventually save the county money in interest.

The county also has smaller reserve funds to pay for smaller projects, such as repairs.

What This Means to Taxpayers

Mecklenburg County taxpayers would see the tax rate drop by about 1.2 percent, from 83.68 cents per $100 of value to $82.66 cents per $100, under the proposed budget.

The proposed decrease would save the owner of a $175,000 house just less than $18 annually on county taxes.

Staff writer Peter Smolowitz contributed.

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Copyright (c) 2006, The Charlotte Observer, N.C.

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