Charlotte manager: No tax increase but smaller city budget proposed due to COVID-19

City Manager Marcus Jones said he does not plan to spend “a penny” from Charlotte’s “rainy day” funds in the coming fiscal year, despite the coronavirus pandemic drastically reducing tax revenue.

Jones presented his proposed $2.55 billion budget to the City Council on Monday evening — a 3% decrease from last year — that he said manages to maintain core city services and ongoing projects.

“I know it would be irresponsible for us to dip into the operational reserves when you have a structurally balanced budget,” Jones said.

The city’s general fund would be $718.8 million, a decline of about 1.2% from last year.

Taxes would not increase, Jones said. Still, homeowners would see a monthly fee increase of about $1.24 from Charlotte Water. Solid Waste Services fees would increase by 80 cents a month, or $9.60 annually, according to the city’s budget book.

City staff would not be furloughed or laid off, Jones said. Charlotte employees could be eligible for a 3% raise, and those in public safety could see a gradual increase of up to 6.5% under his recommendations.

The city had faced a nearly $22 million budget shortfall, Jones said. But rather than pulling from reserves, certain funding sources were rerouted in the coming fiscal year’s budget.

City departments also made adjustments to save $8.5 million, which included implementing a hiring freeze, eliminating vacant positions and reducing discretionary expenses, Jones said. The freeze does not apply to first responders in the Charlotte-Mecklenburg Police Department and Charlotte Fire Department, according to city spokesperson Cory Burkarth.

Funding would remain stable for the city’s community partners, Jones said. For example, the Arts & Science Council would continue to receive about $3.2 million.

“Right now, we feel comfortable that we are not creating any undue burden on us going forward,” Jones told reporters Monday afternoon. “However, we are already prepared for the first quarter (of fiscal year 2021) to make any necessary adjustments.”

The city tax rate would remain about 35 cents per $100 of assessed property value, or close to $750 on a home with the area’s median value of $214,800.

Affordable housing

Under his proposal, Jones said the city would move forward with a $50 million housing bond and a $44.5 million neighborhood bond, intended to spur infrastructure and business growth.

“We’re keeping the momentum in affordable housing,” Jones said.

Jones said an additional $24.5 million would be invested in Charlotte’s “opportunity corridors” — areas such as Beatties Ford/Rozzelles Ferry roads and Central Avenue/Albemarle Road — that city leaders have long pushed to rejuvenate through economic development.

“We are taking a very different look at these corridors. ... We’re having a strategy around each of the corridors that is specific,” Jones told reporters, outlining improvements to transportation, public safety and community engagement, among other priorities.

About $500,000 would be allocated for crime-prevention, including pilot programs in those opportunity corridors that work directly with community leaders to combat crime.

Transportation

Charlotte would also proceed with a $102.7 million transportation bond, Jones said. Of that, about $7.6 million — in addition to $6.7 million previously allocated — would help ease traffic congestion in Steele Creek, south Charlotte and University City.

“Because the council has been consistent with our priorities, we didn’t have to shuffle too many of these bond cycles, even as we started to address them mid-way through,” Jones told City Council members.

In a separate proposal tied to the city’s sustainability goals, Jones called for Charlotte to buy 20 electric vehicles and invest $1 million in charging infrastructure.

Different budget approaches

Charlotte’s budget approach marks a sharp contrast to how Mecklenburg County intends to handle economic blows dealt by COVID-19.

County Manager Dena Diorio recommended on Friday pulling $52 million from Mecklenburg’s “rainy day” funds — with $33 million to cover “one-time” expenses and $19 million to compensate for diminished revenues.

Both budgets will be adopted in early June, after a series of public meetings.

Jones said COVID-19 would have a “very high” impact on Charlotte’s tourism tax revenues. Tax money generated from hotel and motel stays, for example, could decrease by about 20% between fiscal years 2020 and 2021, according to the city’s budget book. Meanwhile, tax money from rental cars could drop by almost 19%.

In a presentation last month, Jones said those tax streams may not return to normal levels until April 2021, based on national analyses.

And for Mecklenburg, Diorio predicted sales tax revenues might drop by 4% — or, roughly $7.5 million — compared to 2020 due to the coronavirus pandemic.