Chapel Hill budget: No tax increase, but more spending is planned next year
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- Chapel Hill proposed $169.7 million 2026 budget with no tax rate increase.
- Budget includes 4% pay raises for town employees and elected officials.
- Orange County could phase out funding for town library and end its partnership by 2028.
Next year, Chapel Hill property owners could see their first town budget without a tax rate increase since the pandemic.
Town Manager Ted Vorhees presented his $169.7 million budget Wednesday in a 13-minute recorded video message set against a backdrop of Chapel Hill town staff, people and places.
The budget, which includes $99.8 million for day-to-day operations, represents a 3.4% increase over last year, he said. It gives town employees a 4% raise based on what the local job market pays for their position and prepares the town for global uncertainty, including the rising cost of fuel, supplies and technology, he said.
The mayor and council members also would get a 4% pay increase.
Roughly a third of the town’s budget pays for fire and police services, and about a quarter each goes to general government operations and environment and development services. The town will spend nearly $10.9 million next year to repay its debt, and $69.9 million is budgeted separately for parking, transit, public housing and stormwater needs.
The town is getting “closer to a sustainable level of funding,” but costs are still rising, Vorhees said. The budget includes $544,375 to address those costs, expand critical services and advance council priorities.
“As with your household budget, our organizational budget is facing rising costs,” Vorhees said. “Across the board, it costs more to provide all of our services, whether that’s filling up our police cars with gas or renewing the software we use to check out library books, and our staff is always looking for ways to keep costs down while maintaining excellent service.”
A budget public hearing is scheduled for May 20, but town staff could schedule other community meetings this month. The council is expected to vote on the budget June 10.
Read the budget at this link.
What about the Chapel Hill Public Library?
Orange County Manager Travis Myren told the county commissioners in his budget message Tuesday that the county will phase out its annual funding for the Chapel Hill Public Library.
The county pays $621,323 a year under a 2012 agreement — representing roughly 72% of Chapel Hill’s library operating cost. The town’s 2026-27 budget, as proposed, does not account for less funding from the county.
The commissioners previously discussed ending the agreement when the Southern Branch Library opened in Carrboro. The library, located in the Drakeford building, opened last year and could cost the county $943,221 a year to operate.
Myren’s 2026-27 county budget proposal would cut next year’s payment to $310,662 and end the partnership the following year. That recommendation has prompted the Friends of Chapel Hill Public Library to muster opposition to the move.
Vorhees said he will present the Chapel Hill council with options at its May 13 meeting for continuing to fund the library.
What should taxpayers expect?
The town’s proposed budget keeps the tax rate at 50 cents per $100 in property value, which generates a $2,500 town tax bill for the owner of a $500,000 home. Chapel Hill residents also pay county and Chapel Hill-Carrboro school district taxes.
On Tuesday, the county manager recommended a 3.75-cent tax rate increase for a 67.58-cent county tax rate next year. The CHCCS school district tax rate remains 14.79 cents per $100.
Combined, those tax rates add $4,118.50 to the tax bill for a $500,000 home. The county commissioners will look for cuts to offset some of the proposed county increase, they said.
What are the town’s budget priorities?
The proposed budget makes “strategic investments” in council priorities, staff compensation and benefits, core services and fiscal sustainability, Vorhees said. He noted several initiatives that are planned or in progress, including:
- Three new jobs: fleet technician, library experiences assistant and an economic development destination coordinator.
- An economic development opportunity study of the future North-South bus-rapid transit route.
- An ongoing study of how to build out the town’s Everywhere to Everywhere greenway network. The town could leverage its fund balance — money left after paying the bills — to build some smaller-scale greenway projects, Vorhees said.
- Building in-house capacity to better manage construction projects.
- Continuing to dedicate 3 cents of the property tax rate to affordable housing, and working with community partners to address homelessness and public housing.
- Updates to the climate action plan, solar strategy, town vehicle fleet, and stormwater plans.
Has Chapel Hill addressed its backlog of needs?
The town has a five-year plan for handling a $60 million backlog of maintenance and other needs, with a goal of reaching stable financial ground by 2030. The long-term budget gaps have not been solved yet, but the 2025 revaluation generated more property tax revenues, and sales taxes are still growing, giving the town more money to meet its needs, Vorhees said.
Some highlights of next year’s maintenance budget:
- An extra $250,000 to address more facilities maintenance needs.
- An extra $250,000 for resurfacing two or three additional town streets.
- $2 million for 23 new vehicles, including dump trucks, police vehicles, and a tractor.
- $1 million to design two new fire stations, and buy water rescue equipment, an all-terrain vehicle, rescue tools and portable radios.
This story was originally published May 6, 2026 at 8:55 PM with the headline "Chapel Hill budget: No tax increase, but more spending is planned next year."
