Winston-Salem council whittles tax increase down to 1.6 cents

Mayor Pro Tem Vivian Burke (left) was one of several council members opposed to a bus fare hike that Finance Chair Wanda Merschel tried to defend.

The Winston-Salem City Council will consider a 1.6-cent tax increase on $100 of property valuation, following a unanimous vote of the finance committee this afternoon to whittle the tax hike recommended by the city manager down from 4.2 cents.

The committee also scrapped plans to impose a 30-cent fare hike on Winston-Salem Transit Authority bus riders but also put plans to extend service to Sundays on hold, essentially creating a wash as far as the budget is concerned. The budget recommended by the finance committee requires the city manager to come up with a plan for Sunday service by the end of September and gives city staff time to solicit support from nonprofits.

City Manager Lee Garrity said the proposed Sunday routes are designed provide transportation to the city’s two hospitals and Hanes Mall. Baptist Hospital and Forsyth Medical Center are operated by nonprofits. The finance committee, headed by Northwest Ward Councilwoman Wanda Merschel, started with a list of cost savings identified by the city manager totaling $4.1 million and expanded it to $5.4 million, the equivalent of 2.6 cents on the tax rate.

Merschel called the meeting "a dress rehearsal" for the final budget vote on June 18.

The biggest items fall on the backs of city employees, including a $250 cap on pay adjustments that was initially conceived as a means of offsetting increased health-care costs. The reduction saves the city $1.1 million. The city would also $1 million from elimination of vacancies and reduction in force of management and professional positions. 

“I think we can do it if you give me some time,” Garrity told council members. “There will be hopefully few people who lose their jobs. We’ll likely have some people retire and we may have to shift some people around. In the management area, when council members ask for additional reports, it might take a little extra time.” 

Merschel said employees are the city's greatest resource, but also its highest cost.

"As difficult as it is, if our city manager says we can do this — and we will do this in an absolutely professional and compassionate manner — I can support this," Merschel said.

The decision to reduce the cap on employee pay adjustments from $500 to $250 was made at the prodding of East Ward Councilman Derwin Montgomery, who said the city risks putting itself in the hole by picking up the tab for the increased health-care expenses of its employees. He likened it to an employer agreeing to give an employee a raise because his rent had been increased. The budget also includes a $50,000 savings through a 25-percent target for reduction in staff travel. 

The council also found savings of $570,000 from eliminating a police recruit class, $500,000 from a general reduction in operations spending, $200,000 from decreasing vehicle replacement, $250,000 from wiping out a fuel contingency fund, and $100,000 from slowing computer replacement and halting computer application development. 

Other savings come from reducing the city’s investment in an off-street parking fund by using proceeds from the sale of decks ($500,000), reducing the transfer to an economic development fund ($400,000), reducing funds for street and sidewalk maintenance by $200,000, reducing funds for a solid waste enterprise fund by another $200,000, and an estimated increase in sales tax receipts from the state ($330,000).  

The budget still includes $1.9 million for sidewalk and street maintenance. 

The major reversal in the afternoon’s deliberations was the committee’s decision to scrap plans to increase bus fares from $1 to $1.30. Southwest Ward Councilman Dan Besse has been publicly opposing the hike for at least a week, but doesn’t hold a seat on the finance committee, so South Ward Councilwoman Molly Leight, who is vice-chair of the committee, got first crack. 

Leight said she could not support a budget that includes a fare hike, adding that some riders could end up paying $125 more per year. 

“That’s as much as a 1-cent increase on a super expensive house,” she said. “I see that as very regressive.” Montgomery and Mayor Pro Tem Vivian Burke, who represents the Northeast Ward, also said they opposed the fare increase. 

Merschel found herself out-voted on the matter. She resisted the rollback, arguing that a fare hike could be used as leverage to get major employers to chip in to support the system. 

“It’s 1 to 2 percent of our population that ride the bus on a regular basis,” she said. “Which puts the other 98 percent of our population as non-bus riders that are being asked to fund a bus system that — you know, I don’t think we can afford an increase in ridership because it costs more money, to be honest. And we have an opportunity to go to other entities such as the hospitals and make a case for a partnership. If we swallow hard and we pass the burden of an ineffective transit system on to our taxpayers, I find that's totally unfair and I think — not that my opinion matters — we’re losing an opportunity to have a dialogue with the nonprofits.” 

Mayor Allen Joines said he thought the 30-cent fare hike was too much. He added that delaying Sunday service would be a fair compromise, and said the modest cost of the enhancement is likely to make support look like an attractive investment for the hospitals. 

Besse suggested a $200 savings by reducing the city’s contribution to a solid waste fund shared by the city, Forsyth County and the city-county utility commission. The councilman pitched the idea as a way of showing citizens the cost savings of switching over from weekly recycling pickup with bins to biweekly pickup with rolling carts. Eventually, the city will have to cover 60 percent of the annual investment in the fund, but Besse said the city’s agreement with the county does not specify an amount for the next budget year, giving the city some flexibility. 

West Ward Councilman Robert Clark expressed support for the idea, but Merschel indicated she held reservations about springing the decision on county policymakers and staff. 

“The relationship between city, county and utilities commission is not one that I would call warm and fuzzy,” she said. “I would not want to be the one to break the faith.” 

City Attorney Angela Carmon said the agreement does not bind the city to the 60 percent level in the next fiscal year, and Merschel eventually relented. 

“I’m okay with that,” she said.

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