Durham News

March 24, 2014

Durham City Council considers adding to tax-rate increase

Facing a $4.3 million shortfall in the 2014-15 budget, despite a higher property-tax rate and fees, the City Council told the city administration to consider raising the tax rate more to pay for park maintenance and eliminating the residential garbage fee.

Your cost of living in Durham is going up July 1, but just how much remains to be determined.

Last week, the City Council approved guidelines for city administrators making up the 2014-15 budget. Some fee and property-tax hikes were expected, but the guidelines added two more for consideration before final approval in June:

•  An unspecified amount to replace the $1.80 monthly garbage-collection fee imposed on residential customers last year;
•  An extra tax, up to one cent but probably less, dedicated to park maintenance.

Council members spent more than an hour talking about the parks tax last week, an idea the Parks and Recreation Department first advanced as a “penny for parks.”

Council members were skeptical about imposing a full cent, but warmer to a smaller amount, and much of their debate was whether to include a figure in the budget guidelines. In the end, they left the guideline with a blank space “to be considered” after seeing a specific breakdown of what various amounts would pay for.

“I’m just not comfortable raising taxes for Parks and Rec without knowing where it’s going,” Mayor Bill Bell said.

Fee called unfair

The garbage fee met opposition in 2013, most vocally from the People’s Alliance political action organization, which claimed it would unfairly burden poor residents.

Councilwoman Diane Catotti, who voted against the fee last year along with Councilman Steve Schewel, suggested rescinding the fee during a budget retreat several weeks ago. Councilman Don Moffitt proposed it during the guideline meeting and he, Catotti, Schewel and Councilman Eddie Davis voted to have recension considered for 2014-15.

Whether the city would make up fee revenue with a tax increase or by cutting some cost was left for City Manager Tom Bonfield to figure out.

Bonfield and his staff already have a $4.3 million shortfall in projected 2014-15 income to deal with, as well as uncertainties about state actions that might cut shared revenue. That shortfall factors already factors in the tax and fee increases proposed previously:

•  Water and sewer fees, up by a maximum of 3 percent
•  Stormwater fee, up by a maximum of 8.5 percent
•  Property tax, up by 1.29 cents per $100 valuation

How much the water-sewer and stormwater increases cost a customer depends on how much water the customer uses and the amount of impervious surface on the customer’s property. The property tax increase equals $19.35 more on a $150,000 home.

The city authorized gradual yearly increases in water-sewer and stormwater charges in 2011, primarily to pay for required pollution controls to protect Falls and Jordan lakes.

With the property tax, 0.73 cents is for debt service, such as on the street-resurfacing bonds voters approved in 2010; and 0.56 cents to cover salaries for police officers and firefighters hired with federal stimulus money, with the understanding the city would pick up their salaries after the federal grant ended.

Bonfield is due to present a proposed budget at the May 19 regular council meeting, and a public hearing is scheduled June 2.

State law requires the city to adopt a balanced budget by June 30.

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