Davidson Budget: The Downright Ugly

In this third installment of the analysis of Davidson's proposed 2015 budget, we're going deep into the weeds.

If you agree with former Mecklenburg County Commissioner Parks Helms and see small tax increases and spending on pet projects as "just a chicken sandwich and a cup of slaw,"  then you'll probably think this one is being a little picky. We here at aShortChronicle tend to look at these things a bit differently.  The devil is always in the details, and when you're spending other people's money it's easy to let the little things add up.

This one takes us into the realm of Davidson's town planning.

Davidson prides itself on its town planning, and our little town regularly wins awards of all types.  Below is a list of the planning related awards since just 2010:

2010 - Tree City USA 

2010 - Bike Friendly Community - Bronze

2011 - Comprehensive Plan - North Carolina American Planning Association (NCAPA) Planning Award - Honorable Mention 

2011 - Affordable Housing - NCAPA Planning Award 

2011 - Circles at 30 - NCAPA Planning Award 

2011 - 2014 - Fit Community - Bronze

2011 - Walk Friendly Community - Bronze

2013 - Great Main Street Award, North Carolina Chapter of the American Planning Association

2014 - North Carolina Land Trust Government Conservation Partner of the Year Award, Conservation Trust for North Carolina

Note: This list does not even include the CDC grant the town received for Health Impact Assessments as mentioned in Part 1 of this series.  That grant was based largely on the town's planning principles.

Whether or not you agree with the Town's planning ordinance it's hard to deny that among the circle of consultants and "big thinkers" who care about this stuff, Davidson does pretty well at racking up awards.  One would think the ordinance is pretty solid, right?  No need to further polish the apple when it already shines so brightly. Well, apparently not everyone would agree.  Two years ago as part of the 2012-2013 budget, Davidson's Board set aside $75,000 to rewrite the award winning ordinance.  That was extra money, not something carved out of the existing town planning budget.

Where did that money go?

It went to hire The Lawrence Group - the well connected architecture and design firm with a local office here in town.

Back in the late '90s, Assistant Town Manager Dawn Blobaum was a Co-Founder of  The Lawrence Group's NC operation before jumping over to Davidson Town Hall.  Over the subsequent years, The Lawrence Group has done a good bit of work for the Town.  They pulled together the town’s Transit Area Study and Circles at 30 Small Area Plan featured on the firm’s national website.   They also did the design work for $250,000 renovation of the old pump house into the new Parks and Rec offices and the bridge design for the now long stalled Roosevelt Wilson Park new bridge.

Along with all of the private sector work The Lawrence Group has done in town, it's fair to say they know the planning ordinance well, and they certainly know how to get things through Davidson Town Hall.  It's really not surprising that if any firm was going to be hired to further polish the apple, it would be their team.  In fact, it would really be surprising if any other firm was allowed to do it.

As of this writing the overall project to update the planning ordinance still is not done.  That's after an $85,000 contract for The Lawrence Group, an untold number of Town Staff hours, and waiting nearly two years after it was budgeted!
One might think all of that is what makes this "the Downright Ugly" part of this series.  Sadly, it is not.

This year's FY2015 budget has a small item in there for our Town Attorney also related to this rewrite. 

$25,000 for our town attorney to review the updated ordinance when it's eventually done.

That's over and above the $50,000 budgeted annually for Mr Kline's part-time services to the town.

As a side note, we asked for Mr Kline's previous contract to see what was included in that $50,000 per year he receives.  There apparently isn't one.  Instead, he's paid monthly for the "average hours" worked. 

So, here you have the Town hiring local experts for a sizable sum of money, and then hiring our own town attorney to review their work and effectively giving him a 50% raise this year over the amount paid on a nonexistent annual contract.  All this happens while the rest of town staff - including our police officers - is budgeted to receive an average raise of just 2%.  Some will receive less.

Now, that's downright ugly!

Davidson Budget: The Bad

Nobody who has Davidson's best interests at heart wants Mi-Connection to fail.  Period.

We should all be thankful that Mi-Connection just posted its best quarter ever in its creeping effort to get to self sufficiency.  Also, we should all be eternally grateful to outgoing Mi-Connection Chairman John Venzon for the work he's done to get the company headed in the right direction.  We said so here last year as he and his family departed for Kansas City and as he steps down as Chairman he leaves the company with breathing room.  The story in this week's Lake Norman Citizen outlines what a truly awful situation he was handed by those who chose to buy the operation when he agreed to take on the challenge of fixing it.  Hopefully, his contributions won't be lost to history as this story plays out.

However, nobody should believe that being in the communications business is in the long-term interest of our town no matter what the current headlines say.  Getting into the cable business was a bad decision that has cost our town dearly in lost opportunities.  Money that could have been spent enhancing our town has instead gone to bailing out a business we never should have entered in the first place.

That money and those lost opportunities are what once again make Mi-Connection the "Bad" part of Davidson's budget.

Below is the current Mi-Connection situation and how it impacts Davidson's finances in next year's budget.

The town has to set aside $1.3 million this year to cover Mi-C obligations.  What the town owes Mooresville is still growing year over year as well.  It's not shown on this slide, but at the end of FY 2015 Davidson will only have $900k set aside to cover the $1.7 million owed to our "business partners" to the north.  Any relief from this $1.3 million/year drain on taxpayers by 2017 is not likely.  2017 is the first year Mi-C could possibly be sold.   It's much more likely that relief is not in sight until sometime after 2020 and that assumes nothing throws the operation off track in the meantime.  (Something like a major new player such as Google coming on the scene in the local region.)

These annual expenses drain coffers and prevent the town from doing important things like moving forward aggressively on a new fire station or building more greenways - things the town both needs and/or wants.  They have caused the town to implement high solid waste fees for single family homes, and they have kept our tax rate artificially high.

At the public hearing on May 13th, Commissioner Fuller made a very deliberate effort to point out that Davidson's tax rate is the 2nd lowest among the list of towns in the state that Davidson uses a benchmarks for various comparison.  You read that correctly.  Davidson does in fact have the 2nd lowest tax rate among this list of towns - 4th lowest if you also include Cornelius and Huntersville.  One might question if all those towns are true benchmarks, but nonetheless, our rate is not too bad by comparison.   

But only looking at it that way is like putting lipstick on a pig.  

A town's tax rate is driven by a number of factors including the size of the tax base, commercial percentage of tax base, population, and the services provided under the property tax.  Smaller towns with lower tax bases need higher rates to bring in enough revenue for the bare minimum of services.  On the "services provided" side of the equation, many of Davidson's benchmark towns do not have a solid waste fee at all or the fee is much lower than Davidson's $201 for single family homes.  They pay for solid waste pick up out of property taxes.  The rate might be higher, but the overall cost to live in the town might be lower.  Only looking at the rate is not an apples to apples comparison.  Unfortunately, the town currently does not have the data broken down in a way that provides that view.

However, there is one thing for sure if we're only looking at the property taxes.  Mi-Connection costs Davidson about 7.75 cents on our tax rate.

Without the "Mi-Connection tax", Davidson would have the lowest rate among our benchmark towns and even be lower than Huntersville - a town with over 4 times our population.  Only Cornelius would be lower locally.  This would all be true even with the town keeping the huge "tax hike" after the last revaluation when the rate was not lowered to revenue neutral as it should have been.

Think about what that could mean for economic development.  Think about what the story could be if one could showcase all our town has to offer and be able to say we have a truly low tax rate.  There may still be issues with the total cost of living in the town, but from a business's point of view the lower property tax rate would stand out. 

With that in mind our Board needs to keep its eye on the ball and take the steps necessary to prepare for an exit from Mi-Connection.  As things get "better" for Mi-Connection in the short-term, the temptation will be to think maybe being in the cable business isn't such a bad idea.

That's not a mistake we should make twice.

Davidson Budget: The Good

Davidson Commissioners are getting ready to vote on the proposed next town budget in a few weeks - possibly by June 10th.  With that in mind it's time to commence the annual budget review we do here at aShortChronicle.  This year there is plenty of material to work with, so rather than a single post it will be a series called "The Good", "The Bad", "The Downright Ugly".

Let's jump right in with "The Good", and I do truly believe there are some nuggets of goodness in this budget.  There are actions taken that show solid decision making and a movement towards prioritizing spending towards the true responsibilities of government and away from things that frankly government should not be doing.  It's safe to say some of this is the result of the new blood on the Board after last fall's elections.  That's a good sign for the future.

In this previous post we mentioned that the Board was discussing possible increases to the solid waste fees for single family homes to implement weekly recycling and re-instituting fall leaf pickup.  This really needed to be a data driven decision, and it appears that's what has happened.  After receiving the results of the latest citizen survey, there was little support for increasing these fees, and they have been dropped from the discussions.  Moreover, on the recycling side it has since become known that any house wanting an extra recycle bin can actually pay for it directly with the town's solid waste company.  That's the right way to handle this for the very, very small number of homes that may actually need it.  As an added bonus, solid waste fees will actually be dropping for the town's multi-family units to $60 per year.

On the public safety side Davidson's fire department will now be fully funded to have 4 fire fighter/EMTs on call 24/7.  That brings the town's fire protection service up to standard and allows for 2-in/2-out activity on fire calls which increases safety for our first responders.  In the past this was not the case at least some of the time.  Davidson's new Board deserves credit for increasing funding to allow this.  The increased cost was about $75,000, but that's money very well spent.

As another example of good prioritization, the Town has also confirmed that new local dollars won't be going to the Davidson Design for Life program once the current grant funding runs out.  Per town Finance Director Cindy Jones, "DD4L is funded through the project fund, not the general fund.   There are no funds budgeted in the general fund for DD4L program or health impact assessment work."  And that's a good thing. currently this funding comes from a grant from the CDC, and if it continues funding needs to come from outside of the town.  The HIA work provides little to no value for the average Davidson resident.  It is primarily an academic exercise.  Funding this out of the general fund would be a waste of town resources.  (See this previous post on one of the town's HIAs with comments from Davidson College Graduate and former State Senator Dan Clodfelter. Mr Clodfelter is now Charlotte's new mayor).  

Finally, with this budget the Board has begun scaling back direct financial support for local non-profits.  The budgeted amount is being decreased from $50,000 to $35,500 with direct support decreasing for Ada Jenkins.  According to this article in the Huntersville Herald, the recommendation came from Town Manager, Leamon Brice.  The apparent support of this reduction by Commissioner Cashion who also has experience on the finance board of Ada Jenkins should keep the hounds at bay who would usually decry any  decrease to non-profits.  To be clear, the Town still provides a large amount of support to local non-profits in various ways.  However, this decrease should be a model for the Town getting out of direct funding for things that should be handled by private donations - donations like this one to Ada Jenkins from the local Rotary Club.

That's the good news in this year's budget.  Next up "The Bad".

Update: It appears after further discussion, at least some of the direct cash for Ada Jenkins Center is back in the budget.  It's tough to cut no matter how much you try.  The budgeted amount it now back up to $50,000 per the Town's finance office.