Showdown vote to settle fate of trash fee

Jun. 05, 2014 @ 06:48 PM

The City Council will need a showdown vote on June 16 to decide whether and how to repeal Durham’s year-old, $1.80-a-month household trash collection fee as part of the fiscal 2014-15 budget, officials say.

The vote will also decide the size of the city’s upcoming property tax-rate increase. It will, depending on the outcome, clock in at 1.79 cents per $100 of assessed value, 2 cents per $100 or 2.37 cents.

Those would represent, in turn, a choice to retain the trash-collection fee, a choice to eliminate it in phases and a decision to repeal it outright.

Council members ordinarily would have decided the matter on Thursday, but met in special session without members Eugene Brown, Diane Catotti and Steve Schewel.

Catotti and Schewel have signaled support for eliminating the trash fee, but Catotti last week floated the idea of doing it in phases and capping this year’s tax-rate increase at 2 cents per $100 of value.

That “needs to be on the table,” said Mayor Bill Bell, who opposes repeal. “We’ve got three options there, and let people decide how they want to vote.”

Counting Schewel and Catotti, it appears there’s a majority in place to do away with the trash fee. But the timing remains a question.

Councilman Eddie Davis, while favoring repeal, made it clear Thursday he doesn’t agree with Catotti’s suggestion of a phase-out.

“If we did that, we’d be creating a situation where we split the baby in half [and] created a more politicized issue where we have half coming from the fee and half coming from a tax increase,” Davis said. “I would not favor that.”

Brown, who otherwise favors keeping the fee, said last week the council should consider Catotti’s suggestion.

If the council goes with the 2-cent increase of the tax rate, the trash fee would drop to $1.16 a month for fiscal 2014-15, Budget & Management Services Director Bertha Johnson said.

Repeal proponents have argued that the fee is regressive, hitting low- and middle-income residents harder than would a revenue-equivalent property tax.

Bell has countered with a public-relations-based argument, namely that Durham fares badly in tax-rate comparisons to Wake County communities that use trash fees more than it does to supplement their tax revenues.

His closest political ally, Councilwoman Cora Cole-McFadden, on Thursday also argued a monthly fee is easier for low-income residents to handle than the property tax.

“At the end of the year, it’s a whole lot more difficult to scramble up money for taxes than [paying] by the month,” she said.

Cole-McFadden’s logic didn’t convince Davis. “The case you’re making seems to be that people would rather pay more for the convenience of being able to it on a monthly basis,” he told her.

“It’s a minimal amount, it really is,” Cole-McFadden answered, speaking of the $1.80 a month levy.

Homeowners with active mortgages normally pay into escrow accounts each month that cover the end-of-year property tax bill. Renters whose landlords elect to pass on the tax burden likewise would pay a little more each month.

A homeowner with a paid-off mortgage does confront a lump-sum tax bill at the end of the year, but financial advisers normally counsel people in that position to set aside money each month in anticipation of facing it.

The council’s tax reckoning presumes members support City Manager Tom Bonfield’s request for an additional 1.29 cents, to cover rising debt payments and assume the salaries of a number of police and firefighting positions previously covered by federal grants.

It also assumes adding 0.5 cents on the rate to improve parks maintenance.

Thursday’s meeting saw the council deal with several budget-related side issues.

Bonfield reported that Durham Public Schools leaders have signaled a willingness to help pay for the Police Department’s in-school “Gang Resistance Education and Training” program.

A joint working group will spend the next few months trying to figure out the proper split of costs for the GREAT program and the in-school security the officers assigned to it also provide, he said.

The council agreed to add $125,000 to the budget to pay to double the Public Works Department’s cash set-aside for sidewalk repairs, and to give the City/County Planning Department $20,000 to lay the groundwork for setting up a new historic district in the Golden Belt area.

Local activists sought both moves, which officials will pay for out of the city’s savings.

Council members and Bonfield also agreed to cover from savings the estimated $129,000 loss to the city in fiscal 2014-15 triggered by the N.C. General Assembly’s decision to do away with local “privilege license” taxes on business.

The privilege-license repeal goes into full effect next year, fiscal 2015-16, and could then cost the city up to $2.9 million, Bonfield said.

The $129,000 in the upcoming fiscal year represents the loss from a phase-in move that bars it from taxing businesses that operate in Durham without actually having offices or stores here.

Bonfield noted that Gov. Pat McCrory and General Assembly leaders have pledged to look for a way to “hold harmless” cities against a major loss of revenue in fiscal 2015-16.

“For now I view this as a one-time plug fix,” he said of the $129,000 allocation from savings.

Bell said he’d received the same hold-harmless assurances from McCrory’s chief of staff, Thomas Stith, a former Durham city councilman.

But “there’s nothing written,” he said. “You’ve got to hold [McCrory] at his word.”