Next year’s proposed $106.8 million budget continues existing town services, sets a new property tax rate and spends more on stormwater improvements and Chapel Hill Transit.
The proposed budget also includes a slight increase in day-to-day expenses to $63.5 million and is balanced with $2.7 million from the town's fund balance — an account used to manage cash flow and pay for unforeseen expenses.
The Town Council will hold a public hearing May 15 and could vote June 12.
The new tax rate of 50.8 cents per $100 in property value — down from 52.4 cents — reflects a “revenue neutral” rate based on the county’s revaluation. A revenue neutral rate generates the same amount of money for the town.
While the change will lower the tax bill for some property owners, others could pay more. The tax bill on a property valued at $300,000 would be $1,524.
Town residents also pay a county tax rate and a special city schools district tax rate, which were reset to 83.77 cents and 20.18 cents, respectively, for every $100 in property value.
Business Management Director Ken Pennoyer noted the modest 1.39 percent growth in property taxes isn’t keeping up with town expenses.
“Sales taxes are growing and taking up a larger part of our revenue for the general fund, which puts us at a little more risk in case of an economic downturn, because sales taxes tend to go up and down based on the economy,” he said.
All property owners will pay a higher stormwater fee, Town Manager Roger Stancil said. The $6 increase raises the rate to $32.15 for every 1,000 square feet of impervious surfaces, such as driveways and roofs, and will help fund bond projects in the Lower Booker Creek Subwatershed and potentially at Eastwood Lake.
The budget also adds 12.3 percent to the town’s transit budget — to $22.9 million — largely for salary increases and new buses. It proposes spending $5.2 million for affordable housing, including $2.3 million for the town’s public housing department and $638,637 for nonprofit housing agencies.
Affordable housing could be a good candidate for a future bond referendum, Stancil noted. The town also is talking with UNC and UNC Health Care.
“Or, I also understand there is a bill moving through the General Assembly that would allow cities to have a referendum on a quarter-cent sales tax that could be spent for infrastructure and economic development, and we think affordable housing could be one of those,” he said.
There’s also some uncertainty about what will happen at the state and federal levels, Stancil said.
A state proposal to change how sales tax revenues are allocated among North Carolina’s rural and urban counties, for instance, could cost the town between $1.4 million and $1.5 million, he said. The League of Municipalities thinks the legislature could approve the bill but delay its implementation by a year, Stancil said.
The town also is watching federal budget negotiations for what could happen with U.S. Department of Housing and Urban Development, Community Development Block Grant and HOME funding. That money provides significant support for the town’s public housing units and affordable housing plans, he said.
▪ $22.9 million budget represents a 12.3 percent increase
▪ Relies on $2.4 million from reserve transit funding
▪ Chapel Hill, Carrboro and UNC will talk next year about a long-term agreement for funding the transit system
▪ A 2.5 percent salary adjustment that gives a higher increase to employees earning less than market rate and a smaller increase to those earning more
▪ Six weeks of paid leave for parents with a new child
▪ Dedicates $840,000 to retiree healthcare liability
▪ A full-time downtown project manager
▪ A program that pays more to police who speak a foreign language or who volunteer to be field training officers
▪ Planning for an estimated $25 million municipal services center, including a new Chapel Hill Police Department
▪ Fees from licenses and permits is down 27 percent