Eastern Wake News

Zebulon budget proposal includes significant tax increase

Most homeowners in this town can expect to pay more in taxes if the 2016-17 fiscal year budget proposed Monday sticks, even those whose property values decreased in the recent revaluation.

While town staff is recommending a 5-cent increase to the current tax rate, to 57.5 cents per $100 of assessed value, the proposed rate is 8.2 cents more than the estimated rate needed to generate the same tax revenue as last year. That’s because Wake County adjusted property values countywide through a process called revaluation. Towns are required by law to include that revenue-neutral tax rate – for Zebulon, 49.3 cents per $100 of property value – as part of their budgets for comparison purposes following a reappraisal.

The increase is needed to balance the proposed $11.24 million budget, which is about $2.5 million more than the budget for the current fiscal year.

“I think there’s some things there we have to face, and there’s going to be some hard decisions,” Commissioner Dale Beck said after Town Manager Joe Moore presented his staff’s spending plan.

The proposal didn’t come as a big surprise, with town leaders for the past couple months reviewing scenarios of what it would take to get Zebulon up to snuff on vehicle and street maintenance needs, and also to achieve desired results regarding downtown, greenways and sidewalks.

The proposed tax rate, however, would be the highest the town has seen in at least the past 18 years if approved. It would require a resident with property valued at $150,000 to pay $862.50 in town taxes, compared to $787.50 at the current rate.

There is a gap, however, brought on by residential property value decreasing overall by 6 percent in the revaluation. Despite the fall in residential property value, the town’s tax base increased from about $860 million to about $928 million due to both growth and increased values applied to commercial and industrial property. The average home value in Zebulon decreased from $139,070 to $135,395.

“What that means is, if we were to raise the property tax rate to 53.9 cents (per $100 of value) on the average-value house, that person’s property tax bill would not increase at all,” said Finance Director Bobby Fitts.

Fitts said at the revenue-neutral tax rate, the town would lose revenue because the formula for establishing that rate takes into account the average annual tax base growth since the previous revaluation. Zebulon saw significant spurts of decreases to business personal property value in that span, from 2008-16.

Managing investments

Moore rehashed some of issues that have left the town playing catch-up in both vehicle and street management. He said deferred maintenance is costly and compounds quickly into insurmountable problems.

“We had two goals. The first goal was control the cost of investments – don’t let them control us,” Moore said. “The second goal is to gain returns on our investments – so how do we make the investments that we currently have make money, so we’re not overburdening our taxpayers.”

The plan Moore presented for street maintenance was less aggressive than an approach he shared with commissioners at their annual retreat in March, but it still calls for using $254,000 in savings on top of dedicating a 2-cent property tax increase toward street resurfacing.

“This is not a budget to fix the world,” Moore said. “This is a budget to stop the bleeding so to speak, so we’re looking to buy some time. We’re looking to slow things down, stop things from deteriorating, at least getting on a consistent pattern.”

The same applies to vehicle management, he said, noting the amount of money staff is requesting won’t provide an overnight fix, but that as the tax base grows, the value of every cent worth of property tax increases accordingly. Each cent at the proposed tax rate would generate about $80,000.

For fleet, staff proposed using $109,150 in general fund balance – leveraging some in with grant opportunities – and also dedicating a 2-cent property tax increase.

Four cents of the tax increase is dedicated to streets and vehicles, and 1/2 cent increases each targeted property management and making Zebulon a more walkable community. Those figures are intended to be ongoing funding sources toward those areas, according to Fitts.

On foot, in downtown

The budget does not propose “to dump a lot of money into downtown,” Moore said. It does propose to meet people halfway, partnering with those who put forward money or sweat equity toward an improvement.

Budgeted investments in downtown include facade grants; a market study to help the town understand what types of establishments will be successful in the area; matching grants; offering regulatory relief for unique development to occur; and providing seed money for a Main Street Program.

For walkability goals, Moore proposed implementing the recently adopted Greenway Master Plan through a dual-track approach: fill in missing gaps first in existing sidewalks, like along Shepard School Road, and meanwhile buy time to complete a greenway segment in the following fiscal year.

The proposal also requests five new staff positions: a planner/code enforcer, an equipment operator, an asset manager, a part-time administrative assistant and a temporary part-time MPA student intern.

The proposal is now in the hands of the Town Board, which will have work sessions May 10 and May 24, a public hearing on June 6 and at the latest a meeting on June 22, if needed, to adopt the budget.