Raleigh proposes property-tax increase

The city of Raleigh’s proposed budget includes a property-tax increase of about 4 percent, a hike approved by voters in a referendum last fall.

If approved by the City Council, the change could amount to a double-whammy tax hike for Raleigh property owners, combined with Wake County’s proposal to raise its own property taxes.

Raleigh is considering an increase of 1.72 cents per $100 in property valuation, while Wake County is talking about an extra 2.9 cents per $100.

In all, the proposed increases would add up to about $92 per year for someone who owns a home in Raleigh worth $200,000. That’s about 4.2 percent higher than current tax bills.

If the changes are approved, this would be the second year in a row that both governments raised taxes. Wake County’s hike last year paid for voter-approved debt. Similarly, Raleigh’s proposed tax hike would go to pay down new debt for parks, for which Raleigh voters approved $92 million last year.

City Manager Ruffin Hall described the $435 million general fund budget proposal as an attempt to accommodate and prepare for new growth.

The budget balances “the new revenue generated from community growth with investments to address the increasing service demands this growth brings,” Hall wrote in an introductory message.

By contrast, Tony Pecoraro, a member of the conservative Wake County Taxpayers Association, thinks the city is overburdening itself with debt, including the bonds that the new tax increase would pay for.

“We’re starting to see our tax rates go up ... ,” he said, referring to the cumulative effects of school bonds and parks bonds. “Those are some pretty big numbers for a couple of years.”

New expenses, new spending

Property taxes wouldn’t be the only new expense for Raleigh residents under the proposed budget.

▪  Solid-waste fees would increase by 75 cents per month, bringing the typical residential customer’s monthly bill to about $14. The increase would help pay for equipment upgrades, such as devices for tracking trash-collection vehicles.

▪  The new budget also would institute parking fees for downtown decks at night and on weekends. Beginning Dec. 31, the night and weekend parking fee would be $5, with the extra funding paying for new equipment and improved maintenance for parking facilities.

▪  The proposal provides for average salary increases of 2.9 percent for city employees. It also adds nearly 60 jobs throughout the city to a current workforce of about 4,050.

Hall said the proposed hiring is meant to keep pace with a growing population. For example, city employees are conducting more building inspections than at any time since the recession, he said. As a result, the proposed budget would add six inspectors and five more development services staffers.

The new hires also would include eight new police officers, along with significant hiring for public utilities and public works.

▪  With an eye toward downtown development, the city would spend $200,000 to study and plan new parking for the city center. It would spend $800,000 to study the possibilities for consolidating the government’s downtown offices.

▪  In all, the proposed general fund budget would grow about 4.4 percent over the current budget.

Wrestling for revenue

The city is counting on new development and business to offset the loss of the business privilege tax, a fee that municipalities imposed on businesses for operating within their borders. The special tax, which was eliminated by the legislature, previously put about $7 million in the city’s coffers per year.

Raleigh is counting on its increased tax rate, combined with new development, to bring in $1 million in new property taxes. Sales-tax income, meanwhile, is expected to grow by about $3.3 million, or 4 percent, compared with the current fiscal year.

The city will hold a public hearing on the budget proposal at 7 p.m. on June 2.

This story was originally published May 19, 2015 at 2:22 PM with the headline "Raleigh proposes property-tax increase."