“Everything we do before a pandemic will seem alarmist. Everything we do after a pandemic will seem inadequate.”Michael O. Leavitt, U.S. Secretary of Health & Human Services, 2007
To start with the obvious: I’m not an epidemiologist or a public-health official. When it comes to keeping yourself, your family and your neighbors safe, seek the medical advice of actual health experts, such as these, these and these. That means if you’re not taking this seriously, start now. A corollary to the HHS quote above is that if – if – all these recommendations slow or stop the spread of the virus, there will be fewer infections and deaths. The best-case scenario is everything we do over the coming weeks and months will seem like an overreaction. In hindsight, it probably won’t have been enough.
That’s all the health advice. What about the effects of coronavirus on the economy? We know about half of Asheville rents instead of owning homes, meaning they lack a cushion of equity to draw on in bad times, and about half of those renters were already considered cost-burdened, paying more than one-third of income on housing, even before schools and jobs started closing. We know the median income in Buncombe is already somewhat lower than other urban NC counties, and more jobs here are in the service industry and dependent on tourism. Like the long incubation period of this virus, economic impacts aren’t going to be fully felt until paydays weeks and months from now. This is especially true over the budget cycles of cities and counties that depend on tax remittances and development fees with months, even years, of lag times. Whatever the course of the infection, Asheville is likely to hurt from it for some time. And just like with a viral pandemic, acting faster and more dramatically now, before the damage has started in earnest, is going to make a big difference in how bad things get.
And here’s the thing: prolonged economic slowdowns have an impact on local government budgets as well as all our personal budgets. Above is the change in the City of Asheville budget in the first year of the Great Recession. Sales taxes, service charges, and new licenses and permits (e.g., building permits) fell by a combined $6.2 million, almost 20% from their pre-recession highs. A similar hit today would erase almost $9 million in city revenues, just as thousands more city residents need relief on utility bills, taxes, housing, transit/transportation costs, evictions and the like.
I’m not saying that’s what’s going to happen with COVID-19, though Asheville seems especially vulnerable to a crash in tourism and the arts. And the chart below actually paints a rosier picture than the typical market crash. For one, city property taxes happened to get an extra boost in 2009 as Biltmore Park was annexed (though the city actually refunded all $900,000 collected in 2009 as part of the annexation deal.) Second, that bottom “other sources” line got a boost from the American Recovery and Reinvestment Act, the federal stimulus, and a dip into the city’s “rainy day fund,” which at the time stood at 20% of annual expenditures. (It’s currently at 15%.)
I’m pointing this out for several reasons. First, it was that crisis that led to an attitude that Asheville was on the verge of collapse if it didn’t support any and all kinds of development. The Downtown Master Plan that removed review and restrictions for downtown buildings came out of that mindset. Second, as a result of the crash, Asheville instituted a pay freeze for city employees, reduced benefits, and underinvested in roads, parks, city buildings and the city’s vehicle fleet in the years after the Recession, with effects we’re still feeling today. To balance the budget, fees were increased on garbage pickup, stormwater, and other services, even as more people lost jobs, like I did. The hardship increased on low-income residents, artists, people of color, young new workers, many of whom ended up leaving the city or permanently foundering in the lowest economic tier. Those who’ve managed to hold on over the last decade may find this is the blow that finishes their Asheville life. We can’t let that happen. Diversity and artistry are vital, not just to our economic life, but to what makes this a place we love and live.
Lastly, however major or minor this slowdown is, it can’t help but hurry on Asheville’s systemic budget shortfall. We were already projected to run short of city expenditures by next year without a tax or fee increase, with the gap between revenues and the cost of maintaining the current status quo increasing every year after. That’s before popular initiatives like eliminating bus fares and building community solar fields are added to the mix.
I don’t have solutions to all these problems, but after spending most of a decade following city budgets, I have thoughts. First, the city shouldn’t raise property taxes for new items when a tax or fee increase may be necessary in coming years just to maintain core services. Some items in the city’s proposed 3-cent tax increase, including extended transit service hours, seem set to be funded without a tax increase this year, and we should do all of them we can. A transit increase is going to be especially important as people return to work or look for work after quarantine. The TDA should commit to fund 100% of the Transit Master Plan with hotel tax dollars and make that an ongoing source of revenue that keeps pace with costs in future years. The county should chip in funding too.
Second, we should build. Build everything. Take out tons more bonds while interest rates are historically low and pave roads, make sidewalks, create housing. A big part of the expense of these projects in recent years was a tight job market, construction firms with their pick of private development projects. That’s bound to change. Keep people working and pay functionally zero interest while the market is slack. Bonds for capital projects are easy and cheap. Issuing more as the last round is paid off (and refinancing/preredeeming the previous ones at lower rates) is a money-maker. It will just be more expensive to put off work until well into recovery, like we did in 2009. Borrow and build.
Third, don’t let the “ghost town” narrative take hold and push the city to ease restrictions on the type and quality of development we want again. Take advantage of a slowdown to rezone the city for sustainable growth and a move away from tourism as our economic engine. That’s the longer view we should have taken in 2008, but didn’t.
Fourth, however we can, protect the vulnerable. Put the Affordable Housing Committee’s eviction protections in place right now. Use housing trust funds on gap loans and down-payment assistance. The community land trust can hold off awhile. More people are going to qualify for housing vouchers now, but there are still too few landlords accepting them and rents are still higher than voucher-holders can cover in too many cases. Go ahead and start on the artist work/live space in the RAD and use city dollars to fund arts, even if it’s web concerts and future festivals. Remove restrictions on busking. With NC Courts closed, reduce jailing by APD for minor offenses. Gear up for homelessness, especially of children. Spend on small local businesses. Coordinate community resources like meals and rent assistance, and show people what they can do to help. Lots of people are going to be okay through this, but we can’t stand to lose the ones who aren’t.
I believe in #AshevilleStrong. Despite everything coming at us, I believe it’s our time to shine and we’ll rise to the occasion. But it’s going to be tough. The political conversation is going to change, and I want you to know I’m here for it. We live in weird times, but they’re our times and we have to pull through them together, no one left behind. Send me a message via Facebook or email@example.com with your COVID-19 experiences and concerns. I’ll post updates as I have them. – Rich