Last week, I had posted regarding the manner in which the Greensboro budget passed. I expressed the feeling that something seemed to be missing in the previous reporting with respect to how and why the budget passed in the form that it did. I could not reconcile in my mind how it happened that the tax cut was as small as it was; that Knight and Thompson had voted with the Melderec con Simkins bloc; that the budget increased over last year; and that the water rate increase outweighed the tax cut ultimately delivered.
Local conservatives like John Hammer and George Hartzman have reason to be at least somewhat disappointed with the outcome. It would have been nice to see more cuts, a larger tax cut or both.
I will attempt to convey my understanding of what happened during the budget process, and how we might interpret certain decisions that were made.
1. The fact that the budget increased from the previous year by approximately $1 million might seem excessive on the surface. However, a couple of considerations should place this in perspective. First, the increase in spending with last year's budget (that was passed around June 2009) was approximately $14 million. The rate of increase was much lower this year compared with last year. This was not reported elsewhere.
Second, there was one particular reason for the increase. It is my understanding that approximately $2 million in pork spending was carried over from the previous year for technical reasons. Without that $2 million, there would have been a real decrease in spending with this year's budget.
Here is the data:
2008/2009 Actual budget (monies spent): $408 million
2009/2010 Actual budget (monies spent): $422.7 million
2010/2011 Budget: $423 million (including the $2 million carried over from the previous year)
2. The water rate increase was not made on the basis of some abstract, theoretical fear that the city's bond ratings would be at risk if there was no increase. The city receives assessments from a few different bond rating agencies that discuss the city's standing and outlook. These assessments are based in large part upon the ratio of debt to capital in the city's water accounts.
Apparently, the amount of debt we have in our municipal water department was beginning to get out of synch with the amount of capital on a proportional basis. Mike Baron might tell us the debt is due to the increase in capacity we have previously agreed to incur in the context of flat or declining demand for water.
If our bond ratings deteriorate, we pay higher interest rates on our bonds, and incur additional interest expense over the long haul. Residents would have to pay for that if they did not pay higher water rates.
3. The small tax cut has attracted some comment. It was initially hoped it could be larger. A 2% across the board cut in spending was being discussed perhaps to enable a 1/2 cent tax cut; but the numbers could not be made to work because debt service could not be reduced. Zack Matheny reportedly did not want the higher tax cut. Matheny and Nancy Vaughan each wanted certain spending items at levels to which Trudy Wade and Mary Rakestraw would not agree.
Bill Knight and Danny Thompson were attempting to assemble five votes to pass a budget and secure a 1/2 cent tax cut, but the fifth vote was elusive in part because of the differing perspectives of the four council members I mentioned in the previous paragraph. (Hammer reported that Wade and Rakestraw were also disenchanted with the relative absence of cuts in spending, and perhaps certain other spending items).
In addition, Robbie Perkins and T. Diane Bellamy-Small pushed to get $300,000 transferred from the general fund to the Greensboro DOT, which created additional pressure on the ability to deliver a larger tax cut. Perkins was successful in assembling five votes that would limit the tax cut to 1/4 cent when the aforementioned members were in disagreement. There was doubtless some pleasure at the spectre of interfering with conservatives' hopes for a larger tax cut, at least to some extent.
In summary, Knight and Thompson could not work out passage of the budget with a greater tax cut because they could not assemble five votes to do so. Reconciling the positions of Wade and Rakestraw with a theoretical fifth vote would prove to be difficult to pull off. This unfortunate reality is a reflection, in part, of the fact that we do not have a conservative council, and that the two council members in the center-- Vaughan and Matheny-- each had their own perspectives.
I am not sure I agree with Hammer's assessment that Knight and Thompson are moderates. Instead, I would characterize them as moderate conservatives. The ultimate shape the budget took was a reflection of the overall ideological composition and predilections of individual council members-- including those on the left, in the center, and on the right.
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