The Cary town manager on Tuesday proposed a 3-cent property tax increase for the upcoming fiscal year, marking the first time since 1990 that Cary might raise its property tax for a reason other than repaying voter-approved debt.
Cary’s 35 cents per $100 of property value – the lowest rate in Wake County – would rise to 38 cents per $100 of property value under a 2015-16 budget proposed by Town Manager Ben Shivar.
Shivar proposed a $295 million budget for next fiscal year and cited the need to compensate for rising operating costs and revenue streams cut by the North Carolina General Assembly.
A Cary resident who owns property valued at $200,000 would pay an additional $60 per year under Shivar’s proposal, according to a news release from the town.
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Of the proposed 3-cent increase, 2 cents would pay for debt associated with bonds sold after Cary voters approved a bond referendum in 2012. The town informed voters at the time that it might need to raise property taxes as part of the referendum.
Shivar proposed the additional cent to compensate for the $1.5 million Cary expects to lose next year with the elimination of the privilege tax. A privilege tax is a tax many N.C. municipalities levy on businesses within their jurisdiction. After some legislators argued that some municipalities abuse the tax by increasing rates, the legislature voted to quash the tax starting July 1.
The 1-cent increase, which Shivar expects to generate $2.2 million in revenue, is preferred over dipping into Cary’s reserves, he said in an interview Wednesday. He said it will provide the annual funding Cary needs as it continues to grow.
“We have a service level, a mix of services, that this community demands and that the council wants to deliver to its citizens and that is a substantial hit,” said Shivar, referring to the loss of privilege tax revenues.
“We were just minding our own business and they took our money,” he said of state legislators.
Shivar expects the remaining $700,000 generated from the 1-cent property tax increase to be used for consulting services and staff overtime related to the private industry’s gigabit fiber installation efforts. In recent months, Cary has experienced a surge in permit requests from Google, AT&T and Time Warner Cable, he said.
The budget proposal also calls for a $1 increase in solid waste fees; an average 10-percent increase in transportation development fees; and a 3.8-percent increase in water and sewer rates. Households that use about 5,000 gallons per month would pay an additional $2.75 per month, according to the town.
About $78 million of the $295 million proposed budget would go toward capital projects – mostly those associated with increasing the town’s water capacity. More than 70 percent of new expenses are devoted to infrastructure, public works and public safety, according to the town.
The Town Council will try to find ways to avoid implementing the 1-cent property tax increase, Councilman Jack Smith said.
“There will be a lot of effort to see what we can do, to see if that can be mitigated,” Smith said Wednesday.
He added that he had not reviewed the budget thoroughly enough to suggest an alternative. But it will be hard to compensate for the revenue loss from the privilege tax, he said.
“Losing that revenue stream is significant,” Smith said.
He criticized the General Assembly for its decision to eliminate the tax.
“They don’t want to govern, they just want to just rule and take away money,” he said.
The Town Council plans to hold a public hearing on May 21 and June 11 – each followed by a council work session – before voting on a budget June 25.
Demand for Cary services has grown faster than town revenues and even the town’s staff, Shivar said.
He recommends adding 24 new positions. Despite the increase, Cary’s employee-to-resident ratio will continue to fall. If the council approves Shivar’s staffing request, Cary will have 8.1 employees per 1,000 residents – down from the 8.2 ratio this year and the 8.3 ratio last year.
Cary expects to reach a population of nearly 154,000 by the end of the next fiscal year. Ten years ago, when Cary’s population was about 110,000, the town’s employee to resident ratio was 9.8.