WINSTON-SALEM, N.C. — If some city council members get their way, the city tax rate would go up next year by more than the 1-cent increase that City Manager Lee Garrity is recommending, according to the Winston-Salem Journal.
Three of the city’s eight council members spoke Thursday in favor of a larger increase, which is designed to make up for the loss of revenue caused by a new state law on the taxation of some business computer software.
During a meeting of the Winston-Salem City Council’s Finance Committee, Council Member Molly Leight said the city should consider a tax increase of about 1.25 cents rather than 1 cent, so that the city could do more to help independent community agencies that receive financial support from the city.
“I cringe every time I see that graphic about Winston-Salem being the cheapest place in the state,” Leight said, referring to charts that city administrators use to show that Winston-Salem residents pay less for their government than other big North Carolina cities.
Council Member Jeff MacIntosh said he supports more spending for sidewalks and greenways than is proposed, but didn’t propose a specific tax increase.
Council Member D.D. Adams said the city needs “more than a penny” to make the kind of improvements needed for the city to remain competitive with others.
Garrity is proposing a 2014-15 budget of $506.9 million that includes an increase of the tax rate from 53 cents to 54 cents for every $100 of taxable property. Under that increase, the owner of a $150,000 house would see a tax bill that is $15 higher than last year’s bill, $810 instead of $795.
If the tax rate went up 1.25 cents, that same homeowner would pay a tax bill of $813.75.
The city is facing budget challenges that include revenue losses brought on by changes in state tax law and salaries that are lagging behind market rates.
A change enacted by the N.C. General Assembly last year to exclude taxation of certain business software is driving Garrity’s proposed 1-cent increase.
Council members learned Thursday about a new bill that Gov. Pat McCrory signed into law later in the day that eliminates the power of cities and towns to levy business privilege taxes. In Winston-Salem, businesses pay anywhere from $250 to around $11,000 for the license they need to do business, city officials said. Losing that revenue is expected to cost the city between $2.5 million and $3 million, but it won’t take effect until the 2015-16 fiscal year.
To Adams, the revenue losses are one more reason to have more than a 1-cent increase. She said there may be legislation working its way through the General Assembly that could result in additional revenue losses to the city.
City administrators pointed Thursday to a study by the city of Raleigh to bolster its case that it run efficiently. The study found that among the state’s five largest cities, Winston-Salem provided the lowest costs for services, counting the tax rate, water bills and other fees.
The proposed Winston-Salem budget includes market pay hikes of 1.5 percent for employees making less than market rates, and merit pay adjustments of 1.5 percent to 3 percent for employees based on job performance.
One area of spending that council members didn’t dig into on Thursday was the list of appropriations to independent agencies. The Finance Committee expects to tackle those items June 3.