Raleigh's growth straining its finances
Posted January 29, 2015
Raleigh, N.C. — The city's population has increased 10 percent in the last five years, which is starting to pinch Raleigh's budget, City Manager Ruffin Hall told members of the City Council on Thursday.
The council held its annual retreat to plan for the year ahead, and Hall said Raleigh faces a $4 million to $6 million deficit for its 2015-16 budget. He noted, however, that the city has a few months to look for places to close the gap, and he promised to present a balanced budget to council members in the spring.
Much of the shortfall can be blamed on the loss of privilege license revenue. Cities charges businesses privilege taxes to be able to operate within their jurisdictions, but state lawmakers eliminated privilege licenses as part of a tax reform package passed last year. The tax expires on June 30.
Raleigh generates more than $7 million from privilege licenses, or about 1 percent of its annual budget.
Gov. Pat McCrory and legislative leaders have promised to work this spring on ways for cities to make up for the lost revenue, but until that happens, Hall must budget based on not having any of that revenue.
Hall also noted the difficulty in budgeting for Raleigh's growth.
"We have more households (where) we have to pick up garbage. There are more streets we have to maintain. There are more leaves we have to collect. There are a lot of demands for additional services on the city," he said. "It's a good problem to have, and we're lucky to be in that particular position. But hopefully that growth will generate additional revenue that we can use to pay for that. That's what we're currently trying to balance against the loss of other potential revenues."
The city won't have to cut services, he said, but it might lack the money needed to pay for new positions such as additional police officers or firefighters.