By Susan Dickson
Staff Writer
Orange County Manager Laura Blackmon recommended an 8.8-cent increase on the ad valorem tax rate at the board of county commissioners meeting on Tuesday.
The increase would raise the ad valorem tax rate to $1.038 per $100 of property valuation, representing a 9 percent increase over the current 95-cent rate. The recommended $188.3 million budget is an 8.4 percent increase over last year’s approved budget.
Under the proposed budget, for a $200,000 home the ad valorem tax would increase $176, to $2,076.
According to Blackmon, one cent on the ad valorem tax rate would yield about $1.27 million in revenue, a minimal increase over last year’s $1.25 million.
This year’s budget is particularly challenging, Blackmon said, because the county is attempting to balance increased service demands with sluggish revenue growth.
Blackmon also recommended increasing the Chapel Hill-Carrboro special district tax by 2.65 cents, to 23 cents per $100 of property valuation. For a $200,000 home, the proposed increase would cost about $53.
One cent on the special district tax rate would yield about $809,000.
According to Blackmon, debt-service payments account for more than 13 percent of the proposed budget. Since 1998, the county has authorized $325 million in debt financing, and this year debt-service payments will reach more than $26 million.
Blackmon said that because of unfunded needed facilities in the county, she does not expect debt-service payments to decrease in coming years. The county is projected to open 11 facilities during the next year.
In addition, Chapel Hill-Carrboro City Schools will open Morris Grove Elementary School and add a senior class to Carrboro High School next year. Blackmon recommended a $6.8 million increase to funding for both school districts.
Under the proposed budget, nearly half of the general fund budget would fund the Chapel Hill-Carrboro and Orange County school districts.
Several commissioners expressed concern that the proposed tax increase was too high.
“People are really hurting right now,†Commissioner Mike Nelson said. “An almost 9 cent tax increase in a recession is just something that’s not acceptable.â€
Board Chair Barry Jacobs recommended that the county use some of its fund balance to supplement this year’s budget.
“We really need to do something to stimulate our economic growth,†Blackmon said, adding that homeowners pay about 70 percent of the county’s general fund revenue.
Blackmon said she is looking at programs and services to cut in order to minimize the tax increase.
“I think that [cutting services] is one thing that the board is going to have to consider,†she said.
The Board of County Commissioners will hold public hearings regarding the budget on May 27 at the F. Gordon Battle Courtroom in Hillsborough and on May 29 at the Southern Human Services Center in Chapel Hill. Both public hearings will start at 7:30 p.m.
The board will consider the proposed budget at several work sessions in June and will adopt the county budget on June 24.