Cary’s property tax rate likely will go up 2 cents, instead of the proposed 3-cent increase, because of an unexpected increase in electricity sales tax revenues, the town announced Thursday at a budget work session.
The council also voted 4-2 to instruct town staff to add three capital projects to next year’s budget, including $1.2 million to remove the medians at the intersection of Morrisville Parkway and Carpenter Upchurch Road.
Last month, Cary Town Manager Ben Shivar proposed a spending plan for 2015-16 that called for the town to raise its property tax rate from 35 cents per $100 of property value – the lowest rate in Wake County – to 38 cents per $100 of property value to make up for revenues cut off by the N.C. General Assembly.
If approved, it would have marked the first time since 1990 that Cary raised its property tax for a reason other than repaying voter-approved debt.
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.
Shivar had proposed the additional cent to compensate for the $1.5 million Cary expects to lose next year with the elimination of the privilege tax, which the state legislature voted to quash last year.
But Thursday, Shivar said the tax rate will be 37 cents instead and that he’s rescinding his recommendation for the extra cent because the electricity sales tax revenues would compensate for the loss of the privilege tax. The council, however, will need to cut the $295 million budget by $153,000.
“That is doable,” Shivar said.
Council members, sitting around a table in a conference room, leaned back in their chairs and smiled as Shivar broke the news.
“I like your recommendation a lot,” Mayor Harold Weinbrecht said, drawing laughter throughout the room. “This is great news for all of us.”
Shivar said he didn’t initially rely on the rise in electricity tax revenues because the N.C. General Assembly changed the formula for how it’s distributed in 2013, and budget planners weren’t certain that the change would benefit Cary on an annual basis.
Electricity sales tax revenues were much higher than expected after the first two quarters of the fiscal year, said Karl Knapp, Cary’s budget director.
“But we thought it could be seasonal,” Knapp said.
Budget planners were confident they could rely on the additional funding after third-quarter revenues also came in higher than expected, he said. They expect the town to collect an additional $1.9 million in electricity sales tax revenues next fiscal year, Shivar said.
The data is so new, he said, that Cary’s department heads didn’t learn of the news until Shivar announced it at the work session.
The staff hasn’t decided yet where it will cut $153,000, Shivar said.
The draft budget includes more than $10 million for transportation projects; $900,000 in upgrades to the USA Baseball National Training Facility; and $400,000 for improvements at the WakeMed Soccer Park.
The budget also would add 24 new positions, including a police officer, three firefighters for the new Chatham Street station and customer service representatives in various departments.
Other fees, including solid waste and transportation development, are scheduled to increase.
Capital projects added
The council asked the staff to reduce funding in other areas to allow for three capital projects to move forward.
In addition to removing the medians, the town would spend $75,000 on the town’s first “pocket park” at 601 Kildaire Farm Road and $25,000 to add a large shade structure at Ritter Park.
After considering three methods for funding the projects, the council voted 4-2 to reduce the budget for sidewalk improvements from $1.6 million to $780,000; postpone a $380,000 effort to extend the town’s fiber network to the Cary/Apex Water Treatment Facility; and reduce spending on storm drainage projects from $600,000 to $500,000.
Weinbrecht and Councilman Jack Smith voted against the move, saying they wanted to find a way to fund the three capital projects without cutting from the sidewalks budget.
“It’s a quality-of-life thing,” Weinbrecht said.
The council plans to hold another work session June 16 at 6 p.m. The council may need to schedule an additional work session to discuss where to cut $153,000 before it adopts the budget on June 25, he said.