Orange County property owners will pay a higher tax bill next year, but maybe not as much as they were expected to pay.
The county's final proposed $226.7 million budget reflects several changes the Orange County Board of Commissioners made Tuesday, including a $280,000 reduction in the county's proposed contribution to its backup retirement benefits fund.
The move let the commissioners advance a slightly lower tax rate increase.
While the budget won't be approved until June 19, the commissioners voted their intent Tuesday to set the tax rate +at 85.04 cents per $100 in property value — an increase of 1.27 cents.
They left the Chapel Hill-Carrboro Schools district tax rate at 20.18 cents per $100 in property value.
That means the owner of a property valued at $300,000 would pay a county tax bill of $2,551.20. Those living in a $300,000 home in the Chapel Hill-Carrboro City Schools district would pay an additional $602.40 in taxes.
Residents who live in the Orange County Schools district do not pay the special tax.
The Chapel Hill Town Council will vote on its recommended town budget Wednesday and is expected to enact a 2-cent tax increase for transit and operating expenses, istead of the proposed 3-cent increase.
That would set a Chapel Hill tax rate of 52.8 cents per $100 in property value, for a tax bill of $2,112 on a $400,000 home.
The Carrboro Board of Aldermen is considering a half-cent tax increase in its recommended budget.
County Manager Bonnie Hammersley initially had proposed a 1.42-cent increase in the property tax — the first in a series of potential tax increases over the next four years to pay, in large part, for the 2016 voter-approved $120 million school construction bond.
The increase also will cover county construction projects, including a new $28 million Northern Campus on U.S. 70, with a $21. 8 million, 144-bed jail, an environmental and agriculture center, and a parks operations office.
The commissioners spent some time debating whether to go higher before approving the increase Tuesday.
They agreed the lower rate would be a one-time gesture that saves the owner of that $300,000 house an extra $4.50 in taxes, but not before Commissioner Mark Marcoplos suggested a higher tax rate increase — to 2.42 cents per $100 in property value.
A higher increase now would save taxpayers money in the long term, he said, since the phased-in increases could amount to nearly 8 cents over the next four years. If they implemented the tax rate needed to pay the debt now, the increase would have been 5 cents.
The extra money could be saved until it's needed, he said.
"We haven't raised taxes in a while. We raise them a little bit more this time than planned, and down the road, that saves people 30, 40, 50 dollars on their tax bill. That's real savings," he said. "It wouldn't be a big shock to go to a somewhat higher tax rate this year."
Chairman Mark Dorosin said he understands the idea, but a higher tax increase would hit "people on the margins much harder."
"I think there’s a tradeoff in the long-term costs vs. the short-term costs, but I think in that tradeoff, I come down on pulling the Band-Aid off slowly," Dorosin said.
Marcoplos' suggestion failed to get enough votes to pass. The commissioners chose the lower, phased-in tax rate increase instead.
Roughly 48 percent of the county's budget would pay for local education costs. The schools also receive state and federal money.
The commissioners also approved $84.9 million in local funding for the Chapel Hill-Carrboro and Orange County schools. That would meet most of the $3.1 million increase requested by the city schools, while providing the county schools with enough to cover $1.2 million in growing state-mandated costs.
The city schools budget is slated at roughly $51.6 million next year; the county schools would get $33.4 million. Another $3.6 million would pay for school nurses and resource officers in both districts.
The increase adds $174 to the county's allocation for each student, bringing it to total local cost of $4,165 per student.
▪ Solid waste and recycling customers will pay $132 next year, an increase of $4. The county is expected to continue raising the fee until it reaches $148 in the next two years, the amount needed to cover the program's annual costs.
▪ Homeowners served by the Eno and Little River fire departments will pay an extra penny next year in fire district taxes. The Eno fire district tax would be set at 9.68 cents per $100 in property value; the Little River fire district tax would be set at 5.92 cents.
▪ The board approved $59,000 in additional money for local agencies, including $50,000 to make up for a Northside Neighborhood Initiative funding loss.
▪ The board set aside $100,000 to support the Inter-Faith Council for Social Services community kitchen project in Carrboro, and $21,800 for Chapel Hill-Carrboro Meals on Wheels, Orange Congregations in Mission and Orange County Rural Alliance food delivery programs. The board will consider providing the money this fall during a discussion about its policy of funding local agencies.
▪ County employees would get a 2 percent raise and a “living wage” of at least $15 an hour ($14.25 for temporary employees), up from $13.75 an hour. Employees also could receive bonuses of $500 to $1,000, depending on their job performance.