Orange County’s choice: Gradually higher taxes over 3 years or take a big hit now

Orange County property owners can expect to pay higher taxes next year, but how much depends on whether the commissioners levy a bigger hit now to cover county debt or gradually increase the tax rate over a few years.

County Manager Bonnie Hammersley’s fiscal year 2019-20 budget, which starts July 1, recommends $236.4 million for capital projects and daily operations.

Budget public hearings will be held May 14 at the Whitted Building in Hillsborough and May 16 at the Southern Human Services Center in Chapel Hill. The commissioners could adopt the final budget June 18.

The budget includes $92.1 million in local money for the Chapel Hill-Carrboro and Orange County school systems and is $13.6 million more than the fiscal year 2018-19 budget, which ends June 30.

It recommends a 1.5-cent property tax rate increase — over half for debt payments and the rest for operations. That would make the county’s tax rate 86.54 cents per $100 in property value. The owner of a $300,000 home would pay a $2,596.20 property tax bill, roughly $45 more than the current bill.

A penny on the county’s tax rate generates nearly $1.9 million. The county generates nearly 70 percent of its revenues from property taxes, with another roughly 11 percent coming from sales taxes.

Bonnie Hammersley
Bonnie Hammersley Orange County Contributed

The commissioners also could approve a bigger tax-rate increase now — 5.8 cents per $100 in property value — and bank the extra money for future debt payments, Hammersley said.

If the commissioners approve only the 1.5-cent increase this year, the tax increases projected through 2022 could total 9.13 cents, she said.

“I’m recommending the incremental [tax rate increase], because there is some flexibility with that because the economy may be better and we may not have to do an increase as much as [projected],” Hammersley said. “But if they did choose to do the one time [increase], then that would go directly into a reserve so that it would be saved for the future.”

Large commercial projects in the pipeline, including the Wegmans and Carraway Village developments in Chapel Hill, could help ease the burden on homeowners, who now pay 80 percent of the county’s property taxes, down from 84 percent a few years ago.

“Maybe the needle’s moving, but it takes a lot to move the needle when it’s just natural growth,” Hammersley said.

The tax increases were expected in large part to pay for a $120 million schools construction bond that voters passed in 2016. Over half of the money has been spent. Another $20 million is budgeted for 2019-20, and the final, $14.5 million could be spent in 2020-21.

The increase also will pay for county construction projects, including a nearly $35 million Northern Campus on U.S. 70, which will have a new county jail, environmental and agriculture center, and parks operations office.

Carrboro, Chapel Hill and Hillsborough residents also pay property taxes set by the town governments, and Carrboro and Chapel Hill property owners pay a schools district tax.

Hammersley did not recommend an increase in the schools tax, now 20.18 cents per $100 in property value. Residents who live in the Orange County Schools district do not pay the special tax.

Town Manager Maurice Jones released Chapel Hill’s budget Wednesday, which calls for a 1.6-cent property tax rate increase. Carrboro and Hillsborough have not yet released their town budget proposals.

How much will the schools get?

Roughly 49.5% of the county’s 2019-20 budget is allocated to the city and county school districts. Each school board decides how to spend its district’s money. The districts get county money based on their enrollment numbers, and also get state and federal funding.

The Chapel Hill-Carrboro City Schools expect to have 12,274 students next year, including 169 charter school students. The Orange County Schools expect 8,134 students, including 843 charter school students.

The budget allocates $55.4 million for the city schools, $3.8 million less than the district’s $59.2 million request. It allocates $36.8 million for the county schools, roughly $800,000 less than the district’s $37.6 million request.

A proposed $175 per student increase brings the total local spending per student to $4,340 a year.

The budget also includes $3 million in one-time spending for school maintenance needs.

What will fire service, trash and recycling cost?

Solid waste and recycling customers will pay $142 next year, an increase of $10. The county expects to raise the fee to at least $148 by 2020-21 to cover the program’s annual costs.

Homeowners served by the Damascus and Southern Triangle fire departments could pay an extra half-cent next year in fire district taxes. Homeowners in the White Cross fire district could pay an extra penny. Hammersley said the increase will help those fire departments hire part-time staff to supplement the declining number of volunteers.

What about county employees?

Between 60% and 65% of the county’s operating budget is spent on personnel, Hammersley said.

County employees could get a 2 percent raise. All full-time employees earn a “living wage” of at least $15 an hour, Hammersley said. Temporary employees could get $14.95, up from $14.25 an hour.

The budget includes money to hire two Orange Public Transportation drivers and an operations manager, an Information Technology security officer, a Criminal Justice Resources attorney, five sheriff’s deputies (half of what was requested, Hammersley said), and a community paramedic.

The computer security officer was added to the budget following a ransomware attack that took down Orange County’s computers and wireless systems in March.

The Criminal Justice Resources attorney will help people get their driver’s license back when they can’t pay court fines, “so they can go to work and actually pay their fines at some point,” Deputy County Manager Travis Myren said.

The community paramedic will not respond in an emergency, but will follow up later with those who called 911 to report falls, opioid overdoses and other issues. The goal is preventing some of those calls and helping the county’s emergency services operate more efficiently.

What are the big-ticket projects?

The 2019-20 budget also includes $47.4 million for capital projects, including $34.4 million for school construction projects and maintenance and $13 million for various county projects, including:

$3.25 million to prepare county buildings to handle more intense and frequent weather due to climate change. The money is in addition to $3.5 million spent this year on emergency repairs to three buildings: the Battle Courtroom at the Orange County Courthouse, Government Services Annex and Phillip Nick Waters Emergency Services Building.

The county wants to finish repairing the Government Services Annex; replace mechanical equipment at five locations; complete a humidity impact study; complete roofing and exterior repairs to several other buildings; and address stormwater and waterproofing issues at the Whitted Building.

$216,300 to remodel a Justice Center office in Hillsborough for the Criminal Justice Resource Department

$150,000 to help expand Open Broadband service into southwestern Orange County

$450,000 to co-locate a new EMS substation at the future Orange Rural Fire Station and Hillsborough Police substation in the Waterstone development in Hillsborough

$34.4 million for school construction projects, including $20 million for a new classroom wing at Cedar Ridge High School and roofing and mechanical system replacements at several schools. The money is part of a $120 million school bond that voters approved in 2016.

$1.4 million for parks projects, including $550,000 for a new ballfield and related improvements at Cedar Grove Park; $289,000 for Mountains-to-Sea Trail easements and construction; and $150,000 for a performance area at River Park.

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Tammy Grubb has written about Orange County’s politics, people and government since 2010. She is a UNC-Chapel Hill alumna and has lived and worked in the Triangle for over 25 years.