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Town budget has no tax hike, but adds trash pickup fee

2010-11 davidson budget coverBy DAVID BORAKS

Davidson officials are proposing a three-point approach to raising the budget-busting $2 million needed in the coming fiscal year to subsidize the town-owned MI-Connection Communications System: cost-cutting from a previously announced Town Hall restructuring, spending from town reserves, and imposing a new fee for household trash collection.

The proposed 2010-11 budget leaves the tax rate unchanged, at 36.5 cents per $100 of assessed value. But it adds the new trash collection fee, of $206 per year for a single-family home and $104 per year for apartments and condos.

Meanwhile, a 14-cent tax surcharge on commercial property downtown and on South Main Street would be eliminated as part of a drive to make Davidson more friendly to commercial development.

Eric Hardy

Finance Director Eric Hardy leads the board through a presentation Tuesday. (David Boraks/

Those are the headlines on the $8.4 million budget that Town Manager Leamon Brice and Finance Director Eric Hardy presented to the Town Board Tuesday night. The budget is not final. The Town Board will review the manager’s plan, then hold a public hearing at its work session next Tuesday, May 25. A budget vote would come either June 8 or 15.

The budget is actually about 4 percent lower than what the town will spend this fiscal year. That’s largely because of the major street resurfacing campaign last summer, expenses that won’t be in the coming year’s budget.

By far the biggest factor in next year’s budget is MI-Connection, the local cable and communications system that Davidson owns with the town of Mooresville. As Mr. Hardy reviewed for the board, MI-Connection two weeks ago sent the towns an outline of its 2010-11 budget that requested a $6.4 million subsidy for the coming year. That would be split according to the towns’ relative ownership – 31.25 percent for Davidson ($2 million) and 68.75 for Mooresville ($4.4 million). (See May 7, 2010, “Towns get their 2010-11 cable bill: $6.4 million”)

To come up with its $2 million, Davidson would withdraw $804,179 from its reserves, known as its fund balance. It would raise $749,490 from the new solid waste fee. And it would generate additional savings from the Town Hall restructuring and by outsourcing a variety of services in Public Works and Parks & Recreation.

By dipping into its reserves, the town would reduce its fund balance from a current $3.47 million, or 41.3 percent of operating expenses, to $2.67 million or 31.7 percent of expenses. And he said reserves likely would be needed again next year, when MI-Connection would need an additional, though likely smaller, subsidy.

Mr. Brice said the state requires a minimum 8 percent in reserves. The Local Government Commission in Raleigh, which reviews local government finances and borrowing, expects the town to “stay in line with communities our size,” which would be about 40 percent. He said the town hopes to reduce reserves in the next couple of years to no more than 25 percent. “We are told by LGC if we get down to 20 percent, they’re not going to look too fondly on us. It would be a little bit more difficult for us to borrow money for some of the projects we need to do, such as our new fire station.”

[The 2010-11 budget is also hitting Mooresville. That town is proposing to spend about $3.4 million of its reserves to help fund its portion of the cable system’s cash needs, Mooresville finance director Maia Setzer said Tuesday.]


Board members only received the budget proposal on Monday, and there were a few surprises and points of discussion.

MSD TAX REMOVED – The budget would reduce to zero the Municipal Services District tax surcharge, currently paid by owners of commercial property downtown and on South Main Street, but not in the Exit 30 area. The rate is currently 13 cents per $100 of assessed value. Eliminating the tax would cost the town about $59,000 a year in lost revenue. But Mr. Brice said removing it would help economic development and business recruiting efforts.

FEWER POSITIONS CUT – Meanwhile, new details emerged about the Town Hall reorganization announced May 4 that will trim the town staff. The most notable was that the net reduction in full-time equivalent positions will be only about 2, rather than the previously announced 6 or 7. That’s mainly because of a recently discovered need to add several part-time paid firefighters to make up for a decline in volunteers due to the graduation of several Davidson College student firefighters.

SOLID WASTE FEE, LEAF PICKUP CHANGES – The proposed annual solid waste fee of about $206 per single family home and $104 per multi-family unit would shift the cost of trash and recycling services away from property tax revenue and onto users. (The fee would be collected by Mecklenburg County along with property taxes and motor vehicle fees.) Mr. Brice referred to it as a “user fee,” and said in the future the fees would exactly match the cost of the service. Board member Connie Wessner worried Tuesday night that it might be a hardship for some low-income residents. Mr. Brice said the town would look into ways of reducing the fee, possibly by using existing tax discount programs. The budget does propose ending curbside pickup of loose leaves. As the board discussed last month, that service would shift to an outside contractor, which would collect bagged leaves only. Any bags could be used – paper or plastic – and all leaves would still be composted, Mr. Brice said.

ELIMINATE ARTS & SCIENCE COUNCIL DONATION? – The proposed budget would cut in half the town’s contributions to local non-profits, including Davidson Housing Coalition and Davidson Lands Conservancy, and eliminate the town’s annual $15,000 donation to the Charlotte Arts & Science Council. The latter drew criticism from the board. Commissioner Margo Williams and Ms. Wessner argued that skipping the ASC donation this year might send the wrong signal about the town’s support for the arts. After a lengthy discussion, Mr. Brice said it might be possible to reduce the contribution by only 50 percent, to $7,500, (in line with cuts to other nonprofits) and make up for it elsewhere, possibly from the town’s “needs list” of items it wants to fund this year. Board member Laurie Venzon said she would rather see the town use savings (fund balance) to reduce the cut rather than lop items off the needs list.

NEEDS LIST – As he has in previous years, Mr. Brice delivered the board a list of funded (and unfunded) single-year projects that town staff and commissioners have discussed in recent months. This year’s list includes one major expense – $129,000 for additional part-time firefighters to make up for a decline in volunteers. It also includes 2 new police cruisers and money to implement a new town marketing program. (The board on Tuesday deferred a decision on whether to adopt the marketing plan, which was developed by consultants Arnett-Muldrow.)

These needs would be funded in the preliminary budget presented Tuesday:

  • Debt service for 2 patrol cars, $22,507
  • Additional part time firefighters, $129,000
  • Debt service on new dump truck, $11,254
  • Air conditioning unit for town hall computer server room, $4,000
  • Concrete repairs at fire department entrance, $9,000
  • Adding heating at Roosevelt Wilson Park restrooms, $2,000
  • Renovate O Henry Street off-leash dog park, $3,000
  • Marketing plan implementation, $20,000
  • Study downtown parking needs, $15,000


With the arrival of Mr. Hardy as the town’s first finance director last year, the coming year’s 64-page budget document has a new look: It has been reformatted and reorganized from past years to make it easier to understand. Mr. Hardy also has re-classified a variety of expenses so they make more sense. Among other things, this budget breaks out the town’s spending on social service agencies into a separate category and it lists storm water fees and the new trash pickup fee as separate accounts.

But in outlining the budget Tuesday night, Mr. Brice made it clear that recent and proposed changes in Town Hall are more substantial than just a document reformatting.

He said this year’s budget – and the Town Hall restructuring – reflect both the financial pressures of the weak economy and the troubles at MI-Connection, as well as a desire to re-make town government for different times. For example, he said, the town has shifted staff from planning to economic development in hopes of broadening its tax base.

“Our organization will look different. It started out as a way to just reduce the budget, in response to MI-Connection. It resulted in a new organization that responds to the new world that we’re facing today,” Mr. Brice told the board.

The budget also aims to fulfill the Town Board’s goals for becoming a healthy and fit community, and responds to the new Comprehensive Plan, a sort of town vision for the future that was the result of two years of meetings by citizen subcommittees.

“What we’ve tried to do is respond to the MI-Connection piece and the economy using these two documents (the board goals and Comprehensive Plan) as guideposts,” Mr. Brice said.

“So our response is first of all a reorganization. We went through all of our organization, looked at how the economy had changed the work were were doing, and we … will restructure effective July 1 an organization that responds to the change in work and in compliance with the livability themes and the goals. This budget reflects those reductions in staff and changes in duties,” Mr. Brice said.


Download a copy of the 2010-11 draft budget (PDF), CLICK HERE>

Download pages 59-60 of the budget, which are in larger format, and include current and future organization charts of Town Hall personnel (PDF), CLICK HERE>


The Town of Davidson has begun posting new jobs created as part of the reorganization of Town Hall. So far, jobs in accounting and public works have been posted. See the town website for details,

Town board discusses budget

Davidson's Town Board discusses the budet Tuesday night at Town Hall. (David Boraks/


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David Boraks is the founder and editor of Davidson News LLC, which started in 2006 as a neighborhood blog and evolved into a regional community news network. He is a print, magazine, web and radio journalist, with experience in every nook and cranny of the news world, covering everything from local news to Fortune 100 companies to technology to Asia. He lives on South Street in Davidson, in a house that was at the center of a 1914 murder case. Ask him and he'll tell you that story.

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8 Responses to “Town budget has no tax hike, but adds trash pickup fee”

  1. Rodney Graham says:

    The budget that was presented at tonight’s town board meeting was crafted largely in response to the $2 million subsidy that Davidson must contribute to MI-Connection in the upcoming fiscal year. The funds for this subsidy were generated through a combination of expense cuts, a new fee of $200/house for trash pick-up (in effect, a de facto increase in the property tax rate of about 19%), and by dipping into our reserve funds to the tune of about $800,000.

    MI-Connection was definitely the proverbial elephant in the room. But, just like the proverbial elephant in the room, noone at the table of elected officials and upper town staff talked about him. Instead, leaf collection – a $60,000 budget item – garnered the most discussion, followed by other items of lesser budgetary significance.

    Granted, the import of something cannot be measured solely by how much is spent on it. I fully understand the importance of leaf collection, the arts, and other items that will be impacted by this budget. But, this was a discussion about the budget, and it is interesting that – other than a request from one commissioner to reclassify MI-Connection from a service agency to something else – not one word was spoken about MI-Connection.

    Again, when MI-Connection requires a $2 million subsidy, and our budget is $8 million, then MI-Connection is the primary force behind the changes that were presented tonight. Not the only force, but definitely the dominant force.

    So, here are the questions I wished had been asked by the commissioners:

    1. MI-Connection’s budget assumes that they will grow revenue by 20% in the next fiscal year, and their gross margin will increase slightly. In the past fiscal year they grew revenue by just under 10%, and gross margin fell by 9%. What is the impact on Davidson if instead of growing by 20%, MI-Connection grows 10% like last year? What is our contingency plan as it pertains to MI-Connection?

    2. See #1.

    We need to do some contingency planning and some sensitivity analysis. The reality is that since Davidson first starting talking about getting into the technology business back in 2007, none of the projections have been realized. Hopefully FY2011 will break that trend. But, given the track record I hope our elected officials and town management are working on plan B.

    Granted, this was the first time the elected officials had commented on the proposed budget in public (they had apparently just seen it for the first time yesterday). Perhaps there will be more questioning about MI-Connection at subsequent sessions. But, as a shareholder of MI-Connection (and a taxpayer of Davidson), I’m concerned that at least for this evening the elephant in the room went unnoticed.

  2. Sandy Carnegie says:

    I have not yet read the budget but I am happy to see steps are being made to keep our practical services (leaf collection) going as they now exist.
    I also note that the Municipal Services District tax surcharge was being eliminated. Even though I am an owner of one of the larger buildings in the district, I do not see the benefit to the Town of eliminating this addition source of revenue that can be put back into the Town for that “rainy day” which will surely come again. The economy is tough on everyone but at least this tax was a small amount that helped the Town. I know other businesses in the district may not have the same point of view and I deeply respect their position. For my part, I would not be opposed to continuing to pay this tax as a small contribution to the Town that has given me so much.

  3. Craig Lewis says:

    Rodney is right. A new fee is a tax increase and this is a significant one at that. And why are we pulling it out from the property tax structure? Usually that is done where there is a variable cost structure (e.g. stormwater fee based on impervious surface, for example). To differentiate only between single family and multi-family is an odd variable since they can produce the same amount of trash depending on how many residents there are. And if leaf collection is rolled into that approach, I think that large lots should pay more than small lots – at least that’s a fairly direct relationship. Now, we pay more and we don’t have the benefit of the federal income tax deduction (fees can’t be deducted).

    And more importantly, the use of reserves to offset MI-Connection is a future tax increase in the making. If managed correctly the reserve fund should be used to manage the highs and lows of cash flow for a local government as well as a means to fund capital projects with cash. This means that the long list of capital projects including the fire station (and all of its equipment) will now have to be debt financed instead of paid for with cash.

    The same is true for new police cars, public works equipment, etc. It just astounds me that we (and I really mean most local governments – not just Davidson) – pay interest costs on purchases that go down in value (e.g. police cars) when we should just pay cash and save the money for operational costs. Look at how much interest we pay on annual basis for all of the various items in the budget and I bet it’s very significant.

  4. Rodney Graham says:

    Craig, I think the answer to your question is that the amount of the fee was based upon what the town pays its solid waste collection subcontractor. Apparently there is a discount for multi-family, presumably because the housing is closer together and the collection can do their job more efficiently and thus with less cost.

  5. Steve Lee says:

    I am offended that the town considers me twice as trashy as my neighbors down the street who live in townhouses (that are somewhat more expensive than my house). I’ll survive. But also this is part of the continuing trend to shift the tax burden more and more to regressive taxes (sales taxes, state lottery, etc.).

    I found it interesting to note that part of the decline in the number of volunteer firefighters came from the graduation of some Davidson students.

  6. David Boraks says:

    From my notes on Eric Hardy’s presentation: The new solid-waste fees were calculated based on the town’s costs divided by the number of households.

    The town’s total cost for trash and recycling at single-family homes is $672,686, divided by 3,272 single family homes = $206

    Multifamily services cost $76,300 under the contract, divided by 734 units = $104

  7. Steve Lee says:

    So by “multifamily” they mean a facility with common dumpsters? Obviously it would take the company as much time and effort to empty one roll-out cart as another whatever kind of house people live in.

    Still it’s all a clever ruse. If the headline read “Davidson to have 28% tax increase on homeowners,” people would be up in arms. (Of course it’s higher than that if you’re valuation is under $200,000; the less you own, the bigger your tax rate increase.) There would be Tea Parties on the Green.

    But instead the headline could read, “Davidson Ends Socialized Trash Collection.”

  8. Andy Stevens says:

    I find it ironic that the Town of Davidson has chosen a “garbage” tax in order to fund the continuing “black hole of debt” that is MI-Connection….