Chapel Hill may cut tax rate

Staff WriterMay 7, 2009 

  • The Town Council plans a budget work session at 5:30 p.m. Wednesday at Town Hall. The council is scheduled to adopt a budget June 8.

— Town Manager Roger Stancil is recommending a budget that would cut the town's property tax rate about 14 percent, a level meant to generate about the same amount in property taxes as this year.

The proposed tax rate of 49.7 cents per $100 of assessed property value would mean a Chapel Hill homeowner with a $300,000 house would pay $1,491 in town taxes.

Coupled with a countywide tax rate expected to come in at 86 cents per $100 or lower, the owner of the $300,000 house would pay about $4,100 in town and county property taxes next year. That does not include the Chapel Hill-Carrboro City Schools special district tax, which last year ran about 20 cents per $100.

The town is able to trim last year's 58-cent tax rate by dipping into about $2.5million set aside through cost-saving measures implemented last fall amid the global economic crisis, Stancil said. "We recognized that something was happening and decided to do something about it," he said.

The town is also able to avoid a major tax increase, despite about $6million in annual debt obligations, lower sales tax revenues, and a 17 percent increase in employee health coverage.

"Even with that increase, we were able to come up with a budget that's only a 0.3 percent increase over what we had last year," said Ken Pennoyer, town business services manager.

The budget proposes no layoffs or furloughs, and no salary increases for town employees. Stancil does propose siphoning $1.1million from the town's fund balance -- less than a quarter of the fund balance spent this fiscal year. The town still should be able to maintain its AAA bond rating with a fund balance of 13 or 14 percent of its $49.8million budget.

The town also avoided adding to its $60million debt load by delaying $20million in taxpayer-authorized borrowing at least until next spring, most notably for the expansion and renovation of the Chapel Hill Public Library.

"Hopefully we'll be moving out of the recession at that point," Pennoyer said.

"Our whole strategy is based around the belief that the economists are right," Stancil added.

jesse.deconto@newsobserver.com or919-932-8760

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