Tax bite may get more painful

Across the Triangle, counties and cities are considering property tax increases to make up revenue shortfalls

Just as Triangle residents are getting squeezed at the gas pump and the grocery store, several local governments want homeowners to dig deeper into their ever-lightening wallets.

In Raleigh, City Manager Russell Allen has asked the city council for a 15 percent property tax increase, the largest in more than a decade. The boost would come on the heels of a 15 percent increase in water and sewer rates.

Durham City Manager Patrick Baker wants a nearly 11 percent increase on his municipal tax rate. The city council has already approved a tiered water rate schedule that will boost the average bill by about one-third.

Town Manager Roger Stancil of Chapel Hill also wants an 11 percent hike.

Wake and Durham counties -- both of which are contemplating tax increases -- just completed property revaluations, meaning many homeowners will get walloped with both higher property values and tax increases.

Some residents said Wednesday they feel abused.

"I'm really getting fed up," said Ann Balagna, who lives in North Raleigh.

Balagna, 77, lives off her Social Security check and scant savings. Last year, Wake County reassessed her home at more than $100,000 above its previous value. Balagna objects to what she sees as the Raleigh City Council's willingness to increase the tax burden even as food and gas prices rise.

"I've had to take money out of my savings to pay my property taxes," she said. "I'm going to have to sell in the next year or so."

Frank Tew, a retired physician in Chapel Hill, wrote Mayor Kevin Foy this month after the town manager proposed the 11 percent increase.

"It is doubtful that people's salaries or net worth has increased 11 percent," he told the mayor. "Each increment of increase adds to the pain."

Durham resident Marcia Kirinus downsized her life two years ago, moving from a comfortable 3,000-square-foot home to a modest two-bedroom mill house. Two years later, she's expecting a $3,000 tax bill similar to what she paid on her old house, which was twice the size.

"It seems like everything is sort of escalating to a spin, to where I can't stay afloat," Kirinus said.

Cities tough it out

City and county officials say they're facing the same economic pressures as their residents. A weakening dollar has less purchasing power and almost everything is costing more. With electricity rates climbing, it will even cost more to keep the streetlights on.

Baker, the Durham manager, budgeted an extra $500,000 to fuel the city's fleet of buses, garbage trucks and police cruisers.

"Fuel costs, health insurance, all of those things hit this organization just like they do small businesses, just as they do households," said Baker, who also has proposed adding 90 employees to the city's payroll.

Paul Meyer, a lawyer and lobbyist for the N.C. Association of County Commissioners, said local governments have two primary revenue sources -- sales taxes and property taxes. As the economy slows and consumers spend less, sales tax revenue declines and the pressure to raise property taxes increases.

"I'm seeing e-mails from county managers across the state saying sales tax revenues are down and that's affecting the budgeting," Meyer said.

Despite the strain, most local governments are also barreling ahead with capital projects planned when the economic outlook was better.

Wake County is planning a $214 million justice center. Durham County is planning a $103 million human services complex and a $110 million courthouse. Raleigh has a new $226 million public safety center and another $223 million to construct operations facilities in different parts of the city. Half of Raleigh's 5-cent tax increase will be used to pay debt service on building projects and recently passed park bonds.

"I don't think it makes a lot of sense to build a lesser facility that won't meet the city's needs five years from now," said Allen, the Raleigh city manager.

Mayor Foy in Chapel Hill said the main drivers of the tax rate increase in his town are three big, new projects with a total price tag of more than $53 million: the Town Operations Center, the Aquatics Center and the Southern Community Park.

"It's just part of the cost of growth," Foy said.

Towns that hold back

Some local governments are coping with growth and either holding the line or proposing increases below the annual rate of inflation.

In Cary, Town Manager Bill Coleman has proposed a tax increase of less than 2 percent. Johnston County Manager Rick Hester will propose keeping his tax rate flat for the fifth straight year.

"We've had to tighten the belt quite a bit," Hester said.

Wake Forest resident Connie Davis, 55, has it better than most folks. Beyond the proposed Wake County increase, Wake Forest manager Mark Williams is asking for a relatively modest 2 percent hike.

Still, she questioned whether city and county officials are spending taxpayer money wisely.

"There's definitely some mismanagement somewhere with what's going on," said Davis, who works for GlaxoSmithKline in Zebulon.

"Everything is going up to the point that we don't get the raises we need to keep up. It's not like I'm living a life of luxury."

(Staff writers Mark Schultz, Matt Dees, Samiha Khanna, Meiling Arounnarath, Sam LaGrone, Adam Arnold and Sarah McNeil contributed to this report.)