Tick, Tick, Tick … Tax Hike
“I think the Democrats are trying to set the table to justify a tax increase to save our bond rating,” said Commissioner Bill James, “and they’re wanting to use the debt ratio as cover.”
Hiking property taxes 1 or 2 cents in an election year to pay for $15 million worth of low-priority programs or services would be a tough sell at the polls given the economic hardship voters face, James said. But playing a shell game that raises taxes to help save the county’s coveted bond rating, arguing that the short-term hit would yield long-term savings, might be more politically palatable.
Commissioner Harold Cogdell, a Democrat, said those concerns are overblown.
“I want to explore every possible option for meeting the core needs of the community and meeting our debt obligations in a way that doesn’t threaten our triple A bond rating,” Cogdell said. “I haven’t heard enough to say we can’t do that unless we raise taxes.”
But there might be plenty left to hear, with bond agencies giving Mecklenburg’s rating and debt situation renewed scrutiny, coupled with the county’s sluggish economy and officials dipping into reserve funds.
“The two good things they [rating agencies] always highlighted for us was our strong local economy and our stable reserves,” said Mecklenburg County Finance Director Dena Diorio. “Now our economy is struggling and we’re drawing down reserves.”
In 2008 the Democrat majority on the board of commissioners sent Diorio back to the drawing board on several occasions when she presented options for a revised debt policy that included caps on annual debt issuance. Democrat commissioners balked at the idea, arguing that if they managed correctly they could stay within the debt target goals without hard caps on spending.
Cogdell, who wasn’t on the board in 2008 when the debt policy was revised, said that type of fiscal management and restraint is needed now more than ever.
“Wants are off the table for this budget,” he said, “and we’re going to have to re-examine our needs to make sure they don’t fall into the category of wants.”
James said he isn’t convinced that rhetoric will become reality.
“I think they’re looking for a way to save programs that get them votes without taking a hit for raising taxes,” James said, “and I think this dance with bond ratings is one way they’re trying to do it.”
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