Former mayoral candidate Vince Winegardner recently emailed Town Board members and other town officials to propose a new way of paying for the annual subsidy to MI-Connection Communications System – the local communications network the town owns with Mooresville. There are many questions about how it might work and whether it’s even legal. Here’s his proposal.
To the editor:
MI Connection is no longer a funny joke about questionable decision making by a few. The debt is a serious threat to Davidson’s ability to fund its legitimate needs. In FY 2011 it was a $1.9 million subsidy, in FY 2012 it is a $2.4 million subsidy, and in FY 2013 it is expected to be approximately $2.4 million. These numbers represent about 24% of the budget and overshadow every town decision. The citizens continue to patiently wait for the situation to resolve itself but this non-governmental expense is unlikely to be addressed by the current leadership.
To address this fiscal reality, I am proposing to our town leadership that they make the MI Connection debt a special assessment. This assessment would be the same for all property owners and would be separate from the property tax revenue. This approach would allow property tax rates to be lowered from the current 35 cents to about 23 cents per $100 to generate the same revenue. This approach clearly has its pros and cons. A pro is that the true cost of government is not obscured by the MIC debt.
Citizens would be asked to accept this MIC penalty as an assessment born equally by all. How much would this assessment cost a property owner based on a $2 million MIC annual debt? It would be about $500. That is about the average amount that property owners are paying in taxes for MI Connection.
The lowered tax rate would soften the impact of this assessment. The revised tax rate could be fairly compared to our neighboring towns and probably raised from 23 cents to a value of say … 28 cents which would allow Davidson to get back on track with needed government services and reserves.
The MIC debt is a heavy burden on our town and even heavier on our citizens living on a fixed income. To protect the “aging in place” concept, I propose that the MIC assessment be waived on property owners meeting certain criteria. This would result in lower property taxes for these aging citizens and help them avoid the “property tax squeeze.” The MIC assessment would be adjusted for others to accommodate these aging citizens.
The main downside to this is that the MIC debt would be evenly distributed across all properties except for those elderly that qualify for a waiver. Some will view this as fair – others might view it as the “rich not paying their share.” The best solution for this problem is to free ourselves of the debt. That is unlikely without an independent MIC Task force or equivalent effort. That would be fair solution for all!
Vince Winegardner
River Run
Mr. Winegardner says he is trying to inject the question of shifting the cost for MI-Connection into the conversation about the town budget. In that spirit, we asked him some followup questions.
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Q: Are you planning to raise this in any kind of public forum, town board citizen comment period or anything? Or just circulating by email?
WINEGARDNER: I am trying to inject it into the budget planning conversation. It is politically difficult to raise this issue for the commissioners due to the “fairness issue” e.g. – “You make more so you should pay more mentality.” This is a shared burden – MIC is a non-governmental infrastructure expense comparable to the standard fee we all pay for solid waste. This MIC fee should be divided equally among all residents. I have this info on my web site and will be circulating via email and other media as needed.
Q. What about commercial property owners? If I own a million-dollar building, I would still just pay the $500 assessment?
WINEGARDNER: I understand your question and that is a detail that could be worked out. Maybe a higher tax assessment or maybe the same. The concept we operate under is that commercial property is less expensive to government but yet pays the same tax. Commercial property subsidizes residential. Maybe the lower net tax on the million dollar commercial property would be an incentive for some businesses to stay in Davidson? There is a breakeven on this that could be calculated to avoid the tax revenue loss. Good question.
Q. Let me make sure I understand: This would be an annual assessment – a flat fee? Would this continue annually until whatever time the annual subsidy isn’t needed? Also, you’re talking about exempting some property owners (elderly). What about other low-income property owners? How would you determine who gets exempted? And would rental property owners be allowed to apply for an exemption if their tenants are lower income? Also, does the $500 amount take into account the exemption?
WINEGARDNER: A flat fee based on the forecast MIC debt plus the amount waived for the “aging in place” concept. The $500 figure is rough and based on this year’s MIC debt being pulled from the property tax revenue and then a rough calculation based on an average home property value of $450K. The number needs to be refined. The special assessment fee would hopefully go down but would also be a good barometer and reminder of good intentions going badly wrong. Some in government may not like this visibility. As for who is exempt, I would propose the following: owner occupied, over 65, income/asset test where total income was under $30,000, and property value under $200,000. Rental property would not qualify based on my initial thoughts. These general guidelines could be refined.
Q. You are proposing to shift an evenly distributed tax away from the owners of the highest-valued properties and onto those with lower valued properties. Why do it this way as opposed to the way the rest of the town’s costs are shared?
WINEGARDNER: “Evenly distributed” is the issue. Even is equal. MIC was a bad decision and should be shared equally by all. Our town’s median income is about $77K which makes us all “rich” by national standards. Many of us who are “rich” really are not and that is the issue underlying the polarization of politics in America. We need to control our spending because the “rich” are out of money.
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Also, here’s a related note: North Carolina does have programs to exempt elderly, low-income property owners from some property taxes. The N.C. Department of Revenue says North Carolina residents who are 65 years old or older, or who are totally and permanently disabled, may apply for relief from property taxes if they meet certain requirements, including having an annual income of not more than $27,100 per year (2012). Likewise, disabled veterans also are able to apply for property tax exemptions. Find out more by downloading the application form from the state Department of Revenue.
Mr. Winegardner has submitted a version of this proposal to the Town Board and town officials. Here’s a response from Town Manager Leamon Brice:
From: Leamon Brice
Sent: Tuesday, April 17, 2012 5:58 PM
Subject: RE: As You Plan the Budget Consider a Special Assessment
Vince
This concept has been raised and discussed before. One of the difficulties is enforcing payment.
Special assessments are limited and could not be used for MI[-Connection]. They are also created by petition.
A sub committee of the MI Board will soon begin discussing this flat fee concept. Hopefully that group can further develop the idea into a plan that can work.
Leamon B. Brice
Town Manager
Town of Davidson
I thought the “Garbage Fee” on our property taxes was in reality our “MI-Connection” fee.
Perhaps we can get a grant from the Dept. of Education to pay off Mi-C debt. They have plenty of money and, after all, isn’t cable TV with shows such as American Idiots and Dancing With the Lards really educational? Did I forget the all the tattoo sports? All kidding aside, it is time to consider bankruptcy and let the State of NC take over the town functions.