Chapel Hill, Carrboro, Hillsborough hold line on tax rate, but costs are rising
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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.
UPDATE: The story was updated May 15, 2026, to include proposed budgets for Carrboro and Hillsborough.
Next year, Chapel Hill property owners could see their first town budget without a tax rate increase since the pandemic.
Town Manager Ted Voorhees 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, Voorhees 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,” Voorhees 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.
Voorhees 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, Voorhees 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, Voorhees 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.
Carrboro budget: No tax hike, less spending
Carrboro Town Manager Patrice Toney has proposed a $44.6 million budget for next year — a nearly 30% decrease from the current $62.5 million budget — and no tax rate increase.
The savings largely comes from a significant decline in capital spending on construction projects and big-ticket purchases. The $36.2 million general fund, or daily operations, budget would see a slight cut.
Here are the key details:
- General fund budget: $36.2 million
- Tax rate: 56.5 cents per $100 in assessed property value, generating a $2,543.85 town tax bill for the owner of a $450,000 home. Property taxes pay roughly 56% of the town’s expenses.
- Capital budget: $5.6 million, including to repair the Barnes Street sidewalk, advance the Jones Creek and Bolin Creek greenways, and the Safe Streets for All plan. The town has identified over $71 million in projects through 2031.
- Continuing costs: Chantal recovery, primarily to replace damaged public works vehicles and equipment.
- Town employees: 2.5% pay raise; rising health insurance costs; temporary hiring freeze with no new positions.
- Transit: Carrboro’s share of Chapel Hill Transit costs increase $217,000 to $2.75 million
- Affordable housing: $338,234
The council’s public hearing and possible vote on the budget is June 2. Find more information at townofcarrboro.org/3327/Fiscal-Year-2026-2027.
Hillsborough: Town holds line, looks to future increases
While no tax rate increase or major cuts are proposed, Town Manager Eric Peterson says that will change in the future because of rising costs and other needs, including a fire station, Amtrak station, Ridgewalk Greenway, and water and sewer projects.
Approved homes are not being built, leaving the town to mind the budget gap until the next influx of revenues.
The proposed 2026-27 budget uses $466,231 from the town’s fund balance — money left over after the bills are paid — to cover current expenses. By 2029, Peterson said a 10-cent tax rate increase might be needed to balance the budget. That works out to another $440 in town property taxes for a $400,000 home.
- Total budget: $36.4 million
- General fund: $19.5 million
- Water and sewer fund: $15.8 million
- Tax rate: 51.3 cents per $100 in property value, generating a $2,308.50 tax bill for a $450,000 home.
- Water and sewer rates: First of three 7.5% annual increases. In-town customers would pay a monthly water rate of $26.64 and monthly sewer rate of $37.50, for up to 2,000 gallons of water. Out-of-town customers would pay a water rate of $51.94 and sewer rate of $73.12.
- Why utility costs are rising: The town plans to repair the reservoir’s dam spillway, upgrade the Elizabeth Brady Road sewer pump station and major sewer lines by Cates Creek and the eastern Eno River, and renovate and expand the Adron F. Thompson water and sewer facility.
- Stormwater fee: $15 increase to $120 for homes, plus a tiered, non-residential property increase.
- Town employees: 3% to 5% merit-based increase, plus a $1,000 cost-of-living adjustment.
The Hillsborough Board of Commissioners will hold a public hearing at 7 p.m. May 18 at the Town Hall Annex, 105 E. Corbin St. The budget vote is June 8.
Get more information at hillsboroughnc.gov/about-us/budget-and-finances.
This story was originally published May 6, 2026 at 8:55 PM with the headline "Chapel Hill, Carrboro, Hillsborough hold line on tax rate, but costs are rising."
