Raleigh recommends tax increase to help pay for transportation projects

Downtown Raleigh.
Downtown Raleigh.

Raleigh residents will likely pay more in taxes to fund the city's transportation bond and will see an increase in water and sewer rates.

The budget unveiled to the Raleigh City Council on Tuesday includes a 1.29-cent property tax hike.

City staff members originally called for a 3 percent increase to the city's water and sewer rates. But council members opted for only a 1.6 percent increase instead of the staff recommendation. They also asked staff to come back with more information regarding the multiyear water rates, the rate policy for nonresidential customers and the tier structure, among other items, by the end of the year.

The only council member to vote against the 1.6 percent increase was Nicole Stewart, who said she wouldn't settle for anything less than the staff's expert opinion and recommendation of 3 percent.

"As the only environmental professional on this council, I’ve seen what happens when we don’t invest in programs that protect our water, air and public health, and I cannot send Raleigh down that road." she said.

Council member David Cox had questions about the proposed increase but said he supported the compromise because it requested additional information by the end of the year.

The 1.6 percent water and sewer rate increase would cost the average water customer about 91 cents a month.

Raleigh leaders got their first formal look at the $973.9 million budget, an increase of nearly $55 million over the current year, during a meeting Tuesday.

“Selecting which investments to include in the budget is never an easy task as it challenges us to meet the diverse and growing needs of our community within the confines of limited resources,” City Manager Ruffin Hall wrote in his recommendation to Raleigh City Council members.

Raleigh is a destination where people choose to live, work and play, he said, adding that the council has to look at this when choosing which investments to make into the city.

A majority of city voters backed the $206.7 million transportation bond during last year's municipal election, knowing it would come with a 1.29-cent tax increase. The money would be spent to widen roads, build new sidewalks and bicycle lanes and support a range of transportation projects within the city.

"The only tax increase is from the transportation bond that the citizens voted for," said Raleigh Mayor Nancy McFarlane. "So it's nice to get a budget that has no other tax increases. I think (Ruffin) did a good job with some declining revenues but addressing the areas we need more resources."

Raleigh's median home costs $196,625, and the proposed tax increase would cost that homeowner an additional $25.36 in city property taxes per year. Put another way, a homeowner would pay about $13 more on their city property tax bill for every $100,000 of assessed value.

If the city manager's recommended budget is approved, it'll be the fifth year with a tax increase. The rate was raised by 0.7 cents last year to cover the cost of employee raises after a new pay and classification study. The rate was raised by 2 cents the year before that to cover the debt services on the Dorothea Dix Park property and for affordable housing.

Raleigh's property tax rate would be 43.83 cents per $100 valuation under the recommended budget.

The water and sewer rate increase is needed to address aging pipes to prevent a long-term initiative to avoid failures in the water and sewer system, said Robert Massengill, the city's public utilities director.

"We are proposing to make minor annual rate adjustments along the way, rather than be faced with double-digit increases in the future, which will become necessary over time if we ignore the system needs.”

There are no changes to the solid waste, storm water or parking rates under the recommended budget, but there is a ticket price increase at Pullen Park and Chavis Park.

Here's a look at some of the items included in the city manager's recommended budget.

Replaces equipment including a ladder truck and engine within the fire department and leaf collection equipment, though it will not change the service level of the leaf collection program.

Continues last year's pay adjustment for city employees. A pay increase of either 3 percent or 5 percent for public safety and general step employees and a merit-based increase for all of the city's broadband (administrative and executive) employees. It also brings the city's living wage up from $28,621 to $30,340.

Adds several new positions, including a deputy chief of police, three in the planning department, two in communications, a Minority and Women Owned Business Enterprise analyst and nine positions from the transportation bond.

Funding to install public Wi-Fi at 11 community centers and pools.

Ideas from the city's strategic planning initiative including a tree canopy study, its Connect Raleigh Speaker Series, pop-up art studios and crime prevention through environmental design training.

A budget work session is planned for each Monday in June, if needed, starting at 4 p.m. June 4. A public hearing is planned for 7 p.m. June 5. The budget will be available to read online at www.raleighnc.gov or in print in the clerk's office at the municipal building in downtown Raleigh.

Wake County Manager David Ellis also unveiled his recommended budget, which includes a nearly 3-cent county tax rate increase to provide additional money to the school system and toward affordable housing.

Anna Johnson; 919-829-4807; @anna_m_johnson

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