Budget deadlines looming

As the statewide budget deadline of June 30 approaches, the shroud of mystery surrounding potential tax increases is gradually lifting.

While Carrboro staff are reporting that no tax increase will be necessary, Chapel Hill and Orange County officials are anticipating the need for property tax increases to cover increased debt payments for fiscal year 2005-06.

Chapel Hill Town Manager Cal Horton says a 2.9 cent property tax increase on every $100 of assesed property value over the current equalized rate of 49.3 cents will be necessary for the town’s budget shortfall.

This translates to a payment of $1,044 for a $200,000 home.

The increase is fueled by the more than $1.75 million in debt payments the town will begin paying next fiscal year for the new Town Operations Center.

Taken along with other debt obligations, this once threatened to raise the tax rate by almost 4 cents.

Chapel Hill Town Council members were able to whittle that amount down last Thursday when Horton, per request of council, cut out proposed repairs to the town hall heating, ventilation and air condition system and delayed debt payments for Community Center repairs — a reduction of more than $500,000 in capital improvement.

Council also reiterated Thursday its commitment to holding on to three town-owned buildings: the post office on Franklin Street, the Interfaith Council facility and the Chapel Hill Museum.

“It’s so hard to get a new public building; it's crazy to sell,” said council member Ed Harrison. “But I don't like seeing public buildings underutilized.” The citizens subcommittee has steadfastly argued that it would be possible to generate immediate capital by selling or renting these buildings at market rates.

The towns budget is scheduled to be passed by June 27.

Orange Faces Tough Budget

Orange County Budget Director Donna Dean said county staff is still projecting a 9 cent countywide property tax increase in order to cover rising debt and Medicaid costs.

North Carolina is currently the only state requiring counties to cover Medicaid expenses. These expenses are expected to rise by more than $500,000 next fiscal year.

Dean said given the state’s own budget quagmire, it is unlikely that the county would receive state Medicaid assistance any time soon. These costs have created a $10 million budget shortfall for the upcoming fiscal year.

An important component of that shortfall is the inclusion of $2.3 million to address school equity. Chapel Hill-Carrboro City Schools currently receive about $13 million more than Orange County Schools due a special district tax for city schools.

County Manager John Link has proposed a tier system to address the disparity in funding between the systems and to provide relief for the state budget cuts to education.

Dean said that as of yet she has not received any word from commissioners on the funding proposal, which would amount to a property tax increase of more than 2 cents.

Two public hearings for the county budget are scheduled for May 31 and June 2, to be held in Chapel Hill and Hillsborough, respectively.

County officials hope to pass a budget by June 23.

Carrboro "Holds Line"

Though not immune from county budget woes, Carrboro residents might be breathing a sigh of relief. Town Manager Steven Stewart has recommended a “revenue neutral” budget, which he says offers modest services improvements with no increase in the tax rate.

Due to revaluation, the tax rate will actually fall from 71.5 cents to 62.4 cents. Depending on the individual property value, the change might represent a small increase or decrease in property taxes.

The most expensive item in the $16.3 million budget involves extending city infrastructure to the newly annexed areas in the northern sector of the town, which will cost the town more than $250,000 next fiscal year. Stewart said the town will not begin receiving revenues from these areas until the 2006-07 fiscal year.

Hillsborough Adds Officer

Hillsborough residents also are likely to feel the pinch next fiscal year, as Town Manager Eric Peterson has recommended a 3.9-cent property tax increase.

The increase would help fund the addition of a narcotics officer to the police force. Peterson said the addition was long overdue and that residents had identified drug crime as their primary concern in a survey.

“We haven’t added any new police officers for a least four budget years,” Peterson said. “We absolutely had to have it.”

Contact the City Editor at citydesk@unc.edu.