Transit Time: A Plan B for Charlotte’s transit expansion

Charlotte’s proposed $13.5 billion Transformation Mobility Network is in limbo.

City staff and council members seem paralyzed about when to approach Raleigh — and with what message.

Congestion relief? Economic development? Economic mobility?

There is, however, another way.

The city can just build the plan itself, or more realistically build part of the plan itself.

While raising the sales tax requires approval from the Republican-controlled General Assembly, City Council can raise property taxes on its own.

Here is a look at the math — and what is politically feasible and what isn’t.

Building the full plan

Officially, the city is working with the Charlotte Regional Business Alliance and consultants to build consensus throughout the Charlotte region on a plan to present to the General Assembly. A year ago, city leaders had hoped for a sales tax referendum to be on the ballot in 2021. Lately, though, some council members and city officials have said that might not even happen in 2022.

City estimates say that hiking sales taxes by a penny would raise about $225 million a year in its first year.

To raise that much, the City Council would have to raise the property tax rate from 34.81 cents to about 50 cents for every $100 of assessed value. That’s a whopping 43% increase.

The owner of a $400,000 house would pay an extra $600 a year in city taxes.

If the increase is put in the context of a property owner’s overall tax bill — which includes the much larger county tax bill — the tax hike would be a 15% increase.

Council members say that’s a non-starter.

“Just not feasible,” said Republican council member Ed Driggs.

“That’s not going to happen,” said Democratic at-large council member Julie Eiselt.

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The city could ask the Mecklenburg County Commission to also levy a property tax increase for transit, thus easing the burden on city residents. But even if the county agreed to do so, the residents in the city of Charlotte would still pay for almost the entire bill.

The city of Charlotte makes up 80% of the county’s $180 billion tax base.

Slash the plan, then raise the property tax

Eiselt, who chairs the city’s transportation committee, said that if there’s no sales tax, then the Silver Line light-rail line from Matthews to the airport would need to be scrapped. The full 29-mile line would cost about $8 billion.

“You can’t build the light rail with the property tax,” she said.

Eiselt added: “And if there is no sales tax, then I would only want it to improve the bus system.”

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She is leaving council this summer when her term expires. But she said a good time to consider raising taxes would be next year, when Mecklenburg County is conducting another property revaluation. That will increase the total tax base, giving local governments a choice of whether to “roll back” their property tax rate to collect the same amount in taxes if there was no revaluation.

In 2019, Mecklenburg Commissioners decided not to “roll back” their property tax rate fully. They essentially raised the tax rate by 2 cents, giving the county an additional $36 million.

Eiselt has said she regrets not pushing other council members to do that for the city three years ago as well. She said that money could have been used to improve the bus system.

Driggs doesn’t support using property taxes to pay for the transportation plan. But he said if that’s what council members want to do, then strategically a revaluation year is the best time to do it.

The reason, he said, is council members could argue that — while the city is collecting more tax revenue — the property tax rate is going down.

Slash the plan, ask the county to raise sales tax

Mecklenburg County has the ability place to a quarter-cent sales tax on the ballot without getting permission from Raleigh. That tax can be used for anything.

Commissioners have twice asked voters to approve a quarter-cent tax hike. Both attempts failed.

The first was in 2014, with most money going to education. The second was in 2019, with most money going to the arts.

The county is not responsible for transit, and there have been no public discussions about the city asking for tax, which would raise about $55 million a year.

What could $55 million a year do?

If the City Council raised the property tax by 4 cents, that would raise about $55 million a year.

Last year, the Charlotte Area Transit System spent about $124 million operating its bus system. That includes the express buses, the local buses and “demand response” for seniors and the disabled. It doesn’t include the Lynx Blue Line of the Gold Line streetcar.

Here is how Charlotte that stacks up to peer cities in the Southeast. The first number is how much each transit system spends on buses; the second number is how much on transit overall:

• Raleigh: $38 million

• Memphis: $54 million, $58 million overall

• Richmond, Va.: $56 million

• Tampa, Fla.: $70 million, $74 million overall

• Nashville: $87 million

• Jacksonville, Fla.: $107 million, $118 million overall

• Charlotte: $124 million, $162 million overall

• Orlando: $139 million

• Atlanta: $281 million, $493 million overall

• Miami: $422 million, $553 million overall

• Washington, D.C.: $876 million, $2 billion overall

Charlotte already has one of the largest bus systems in the Southeast compared with cities of similar size.

Having $55 million annually could make the bus system more robust almost immediately, growing the budget by 40%. That would allow CATS to have more routes. And, most importantly, more routes with buses arriving every 15 minutes.

City Council member Malcolm Graham said he doesn’t think the council would support a scaled-back plan that relies on the property tax.

But he said “everything has to be on the table.”

“One of the fixes that a lot of council members have been talking about is fixing the antiquated bus system,” Graham said. “The bus system needs an upgrade to help our front-line workers. We will have to look at how we can help ourselves.”

While the $13.5 billion plan is stuck, council members and city officials have not tackled the larger problem with the bus system: Riders have been slow to come back.

For the first six months of this fiscal year (July 2021 to December 2021), CATS ridership was up 13% compared with the same six months during the first year of the pandemic. That’s mostly driven by more people taking the Lynx Blue Line.

But it’s still less than half of the ridership from the same six months in 2019, before pandemic.

The Omicron wave is subsiding. Will bus riders return — and will Charlotte raise property taxes to bolster the bus system and maybe lure more back?

This story was originally published in Transit Time, a newsletter jointly produced by the UNC Charlotte Urban Institute, WFAE and The Charlotte Ledger.

Steve Harrison, WFAE