Orange County taxes will be going up as expected, but how much and how fast isn't settled yet.
The proposed $226.8 million budget continues county spending at roughly the same level next year. However, the Orange County Board of Commissioners must decide whether to raise the tax rate by five cents per $100 of assessed property value now or potentially by 7.95-cents over the next four years.
The commissioners will hold two public hearings — May 10 and May 17 — and several work sessions before approving next year's budget, tentatively on June 19.
The county needs to increase the tax rate largely to help pay for the 2016 voter-approved $120 million school construction bond. A penny on the county's current tax rate — 83.77 cents per $100 — generates $1.8 million in revenue.
The tax rate increase also will cover other construction projects, including a new Northern Campus on U.S. 70, with a jail, environmental and agricultural center, and parks operations office.
A phased-in increase would raise the county tax rate by 1.42 cents this year, for a total tax rate of 85.19 cents per $100 in property value. That would generate a $2,555.70 county tax bill — a $42.60 increase — for a property valued at $300,000.
A five-cent tax rate increase now — to 88.77 cents per $100 in property value — would put the tax bill for a $300,000 home at $2,663.10. The extra money would be saved until needed to cover rising debt payments.
County Manager Bonnie Hammersley is advocating for the gradual tax rate increase, which would grow with the county's debt payments, expected to peak in 2021-22.
"I'm not recommending (a nickel increase now), because I think that there's some more flexibility in doing a phase-in, because we can evaluate the situation at the time," Hammersley said.
She noted the proposed budget for next year anticipates a 3 percent growth in property tax revenue and 2.4 percent growth in sales taxes.
Also set to rise is the county's solid waste and recycling services fee, by $4 to $132 a year. Additional increases are expected in the next two years until the fee hits $148, which a consultant says would cover the program's costs.
Just over 50 percent of the county's general fund, or operating, budget would pay for local education costs. The schools also receive state and federal money.
Hammersley is recommending a $174 increase in per pupil spending — for a total local cost of $4,165 per pupil.
That would be more than the $123 increase per pupil that the districts received last year, but far short of the $396 increase that the county requested. It also fails to meet the city district's requested $253 increase.
Hammersley noted the proposed $84.9 million local education budget 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 challenge we have is the ADM (average daily membership), and the Orange County Schools is losing students," Hammersley said. "They went down 199 students, and we pay by student, and so as they lose students, the allocation changes, and this year, it went from 60.1 percent [of the local funding] for Chapel Hill-Carrboro to 60.73 percent."
She noted that seven fewer charter school students are expected in the Chapel Hill-Carrboro district next year — for a total of 155. Meanwhile, charter school enrollment is growing by 152 in the Orange County Schools district next year to 769 students.
The Chapel Hill-Carrboro City Schools district also benefits from a 20.18-cent property tax rate; the school board hasn't asked for a tax rate increase. The current district tax rate adds $602.40 to the tax bill for a $300,000 home in Chapel Hill and Carrboro.
Residents who live in the Orange County Schools district do not pay the special tax.
Pay raises, housing
Other budget highlights:
▪ The budget relies on $8.8 million from the county's fund balance — money left over after the bills are paid. Roughly $3 million of that would create a deferred maintenance plan to meet school renovation needs. The districts together have identified over $220 million in school repair needs, and each would get a share based on its student enrollment.
▪ County employees would get a 2 percent raise and a “living wage” of at least $14.25, up from $13.75 an hour.
▪ A $100,000 pilot program could provide local housing vouchers to move families off the county’s waiting list. The local vouchers would supplement federal Housing and Urban Development Section 8 vouchers for 10 to 15 families, Hammersley said. The money would come from the county’s fund balance.