Monday, May 27, 2019

It is time to end the Mi-Connection Tax

The last Board meeting on May 14th saw a spirited discussion among Commissioners about the possibility of addressing what has become a long-standing sore point in the Town budget - the exorbitant solid waste fees charged in Davidson - fees that were implemented in the early days of the Mi-Connection debacle to free up money to pay subsidies needed to keep an ill thought out idea afloat.

Those fees have become known to many as the "Mi-Connection Tax".

Commissioner Jane Campbell raised the subject of these fees as the Board began discussing the proposed budget presented by Staff.  Commissioner Matthew Fort then suggested an overall budget approach of first achieving a revenue neutral tax rate of 28.1c versus the 29c proposed by staff, and then adding roughly 4c to the rate to cover solid waste while eliminating the solid waste fee itself.

Technically, this approach doesn't eliminate the "Mi-Connection tax" because it brings in the same overall dollars to the Town.  Only eliminating the fee and keeping the tax rate at revenue neutral would get rid of the "tax" entirely.  However, getting rid of the fee does return the Town to a less regressive tax setup similar to what it had before Mi-Connection came along.

aShortChronicle has long followed these solid waste fees and the ill feelings they've generated and has endorsed getting rid of them.  See the below stories for that history.

Seeing the idea of removing this fee being given serious consideration is refreshing.  However, it remains unclear how much support there is among Board members for doing it now other than Commissioner Fort. 

There was talk of making this year the last year before addressing next year.  There was also concern about impact to the 50 some odd lower income/elderly households currently exempt from the fee who would pay a something if this was added to the property tax rate.  There was also concern raised that commercial properties would be impacted more significantly by this approach since they would be paying higher rates on top of much higher average valuation increases from the latest reveal, and they already pay for their own solid waste separate from the Town service.

The argument for doing it now espoused by Commissioner Fort was that rates are already changing this year anyway due to the revaluation and packaging this change into that will reduce the number of future changes needed to the tax rate.  Those future changes include the potential relief from the sale of Mi-Connection and the likely need to adjust for paying any bonds issued for mobility and public facilities projects.

Mayor Knox, while pointing out the tax value increases facing commercial properties, also gave the reason, maybe unintentionally, why this probably should not be a deciding factor.  Mayor Knox, whose family owns multiple Main Street properties, mentioned that rents will likely need to be raised to cover the increase in taxes.  This highlights the fact that commercial property owners have more options in dealing with taxes than most individual homeowners.  While obviously nobody likes tax increases, commercial properties can pass along these costs to be disbursed across the business operations.  Homeowners don't have that option.

Finally, the concern was also raised about the relatively small number of people currently exempt from the solid waste fee who would actually pay something if this was transferred to the property tax rate.  The numbers, 50 homeowners totalling a $3,000 impact were mentioned.  Finding a way to address this would need to be part of any solution, but with such small numbers citizens should expect staff to be able to figure something out.

Here at aShortChronicle, the sincere hope is that this Board finds a way to make this change happen.  Previous Boards haven't been able to do that.  However, if this gets done it would be another significant accomplishment for this Board's first term in office together.

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