TAX NEWS - June 2010

North Carolina Tax: Greensboro's small tax cut will impact the next budget

The quarter-cent property-tax cut approved by Greensboro's City Council Tuesday accomplishes two things:

It gives the owner of a $100,000 home $2.50 of tax relief and makes setting next year's budget a little harder.

While cutting taxes looks good on a political tout sheet, this reduction is so insubstantial that few will notice. It amounts to less than 21 cents a month. But the decreased tax rate means that next year's budget discussions will start at a point of lower revenue. When council members vow to allow "no tax increase," they'll really be talking about extending this year's tax cut. At a time when they'll be launching their re-election campaigns, though, they likely won't reverse Tuesday's action.

The council and City Manager Rashad Young deftly sidestepped financial challenges. They cut some spending and raised some fees, but not enough to cause much harm to anyone. They preserved library services, which seemed to be the item of greatest public concern. They'll face the same issues again next year, and probably more. Can they put off city employee pay raises again? The heroics of Greensboro firefighters in containing a massive blaze at the Colonial Pipeline tank farm Sunday already is being mentioned as evidence that they're entitled to better compensation. If not now, can they count on it next year? What impact will the tax cut have on the city's ability to reward them? Is the taxpayer's $2.50 more important?

No doubt, this year's budget was well-crafted, and council members made some good adjustments. Maybe they can work more magic next time, although tapping into reserves and delaying voter-approved capital projects isn't a permanent solution. Refusing to do away with expendable services — loose-leaf collection — doesn't square with a drive to cut taxes.