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How high are your taxes?

Posted on May 19, 2011May 19, 2011 by Staff


Dan Coleman

If you are a property owner in Carrboro or Chapel Hill, your property taxes are too high. Readers may be shocked that I would say so, but they will also be surprised that it is not municipal taxes that I am referring to. It is your county tax bill that is too high, and not because of any mismanagement or malfeasance on the part of county government.

Confused yet? A little-understood fact underlying the above premise is that, throughout North Carolina, the county tax structure leads to residents of incorporated municipalities subsidizing residents of unincorporated areas.

In Orange County, roughly 60 percent of the county’s local tax revenue comes from residents of Carrboro and Chapel Hill. Thus, for example, Carrboro and Chapel Hill taxpayers contribute most of the local taxes that support police protection for rural residents (via the county sheriff’s office). At the same time, municipal taxpayers contribute the full cost of the towns’ own police departments. This is just one of numerous examples that could be offered.

An equitable solution would be to have a separate tax district for the unincorporated areas to fund services they require. This would be similar to the rural fire-district taxes already in place. Such an approach would have the effect of lowering tax rates for municipal residents. However, given the political climate in the state legislature, such a proposal would not go far.

There are those who think that municipal property-tax rates are too high in their own right. Thus, during a recent WCHL forum, panel moderator Jim Heavner asserted that “we have the highest tax rate in the state.” “No, we don’t,” Chapel Hill Mayor Mark Kleinschmidt quickly corrected.

According to N.C. League of Municipalities data on 2009-10 tax rates, for local municipalities ranked among the 500-odd towns in the state, Hillsborough was 22nd, Carrboro 76th, Durham 125th, Chapel Hill 170th and Mebane 195th. Given that Heavner was principally referring to Chapel Hill, one might wonder where he got such a wildly inaccurate idea.

It is worth noting that the level of commercial development is often viewed as a factor in lowering property-tax rates. Given that Hillsborough, Durham and probably Mebane have significantly larger commercial-tax bases than Chapel Hill or Carrboro, it seems hard to draw a clear conclusion along those lines. Tax rates are complex and are determined by a variety of factors. Local government in Orange County does well to consider how to increase the commercial-tax base, but it will not serve us to approach the question in a simple-minded fashion.

Meanwhile, back to Carrboro, where retiring Town Manager Steve Stewart just presented his third consecutive budget with no tax increase and no reduction in town services. This is accomplished during an ongoing recession and at a time marked by steep rises in fuel and health insurance costs. I have not seen a study on the topic, but I imagine this is a record few municipalities can match. Given that key open positions have been frozen, town staff must do more with fewer resources.

Carrboro residents should be pleased that we are getting an excellent value for our tax dollars. None of the towns with tax rates lower than ours (except Chapel Hill) receive fare-free bus service and few have such extensive sidewalks and bike lanes (though some may have other amenities).

One item I am particularly proud of is that, even in the current budget climate, staff has proposed a 1 percent increase in town aid to nonprofit agencies. All sorts of human-services agencies are hurting due to state cutbacks and declining donations. Although town support for any particular agency is quite small, we know this increase is appreciated and hope it will inspire those with the means to dig a little deeper to help our neighbors in need.

Even considering all of the above, the board of aldermen is interested in insights that citizens may have on the town budget. The proposed budget is available on the town website (on the “town documents” page) and we will hold a public hearing on Tuesday.

Dan Coleman is a member of the Carrboro Board of Aldermen.

4 thoughts on “How high are your taxes?”

  1. Lynn Hayes says:
    May 20, 2011 at 9:13 am

    Hi Dan, I’m confused about your rankings of North Carolina cities by property tax. The North Carolina Dept. of Revenue in April 2011 shows these tax rates:

    Durham city is 1.2978
    Hillsborough is 1.478
    Chapel Hill is 1.5404
    Carrboro is 1.6358

    Source: http://www.dornc.com/publications/2010-11taxrates_final.pdf

    When you say that ” Hillsborough was 22nd, Carrboro 76th, Durham 125th, Chapel Hill 170th” what does that mean? Are these rankings from high to low or low to high? Either way they don’t seem to correlate with the actual tax rates.

  2. Dan Coleman says:
    May 20, 2011 at 11:40 am

    Hi Lynn,
    Those #s are highest to lowest. The relevant column in your link is the one called ‘city or town’ since I am discussing municipal tax rates. Thus, Hboro is .62, Carrboro .58, Durham .55, and CH .49.

  3. Lynn Hayes says:
    May 22, 2011 at 5:15 pm

    OK, thanks for the clarification. I just want to point out, though, that people don’t look at it that way. They look at the total tax rate and therefore think Chapel Hill and Carrboro are among the highest.

  4. Dan Coleman says:
    May 22, 2011 at 6:32 pm

    Well, Lynn, I state pretty directly that I’m talking about “municipal property-tax rates.” Perhaps a county commissioner will write a column providing context for understanding the county tax rate. That’s just not my bailiwick.

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