Carrboro homeowners could see town property tax hike this year
Carrboro Town Manager David Andrews’ recommended $71.8 million budget could give some property owners substantially bigger tax bills, despite a small increase in the actual tax rate.
The budget for fiscal 2021-22, which begins July 1, calls for a 0.6% increase in town spending over this year’s budget.
It includes $25.2 million for daily operations and nearly $42 million for construction projects and major purchases, including new greenways, fire and transit vehicles, the town’s share of the Southern Branch Library at 203 S. Greensboro St., and pending renovations to town buildings.
Andrews, who will retire July 31, also is proposing a half-cent tax rate increase, the third and final increase in the last four years for affordable housing. A penny on Carrboro’s tax rate generates $280,644 for the town.
The council will hold a public hearing on the recommended budget June 8 and could vote on a final spending plan June 22. The budget can be found at tinyurl.com/3tumnfhs.
Revaluation, property taxes
Carrboro’s tax rate has remained largely stable for 11 years. Rising property values have provided the town government more money each year to fund rising costs.
The current tax rate is 59.94 cents per $100 in assessed property value.
That is roughly 15% higher than the “revenue-neutral” tax rate after this year’s countywide revaluation.
The state requires counties to do a revaluation at least every eight years so that property values reflect changing market values.
Property values countywide increased 12.6% over last year’s values. Carrboro’s property values rose 14.6%.
Local governments use the old and new values to calculate a revenue-neutral tax rate that ensures the government gets the same amount of money from property taxes after a revaluation as it did the year before.
While towns and counties don’t have to adopt the revenue-neutral tax rate, many use it to set a new, lower rate, such as in Chapel Hill and Orange County. There, the managers have recommended a 3-cent increase over their revenue-neutral rates that still keeps the new recommended rate below what it was before revaluation.
Carrboro’s revenue neutral rate this year is 52.32 cents per $100 in assessed property value. However, Andrews is recommending a tax rate of 60.44 cents per $100 That’s a half-cent increase over the current tax rate of 59.94 cents.
That means most property owners will see higher tax bills next year, and some will see a significant increase.
For example, the owner of a home valued at $300,000 paid the town $1,798.20 in town property taxes last year at the current tax rate.
This year’s bill for a $300,000 home would be $1,813.20 if the town raised the tax rate to 60.44 cents per $100 in value.
However, setting the tax rate at revenue neutral with a half-cent increase — 52.82 cents per $100 in value — would generate a $1,584.60 tax bill.
Carrboro residents also pay county taxes and a district tax that supports the Chapel Hill-Carrboro City Schools.
Budget highlights
▪ Employees: Permanent staff members would get a 2.9% pay increase, but no pay-for-performance bonuses, which depends each year on labor market conditions and the budget. Some council members have argued for a 3.3% pay increase.
Health insurance premiums will fall 9.6% because of a shift to a high-deductible health plan, but the town would make higher payments into the Local Government Employees’ Retirement System. The budget restores money for training in equity and racial sensitivity, risk management and safety, and other topics.
▪ Affordable housing: The proposed half-cent tax rate increase, which was postponed last year, will increase the amount set aside for affordable housing projects to 1.5 cents per $100 in assessed property value, or roughly $421,000.
▪ Climate change: $226,722 to continue implementing a Community Climate Action Plan aimed at reducing greenhouse gas emissions, increasing energy efficiency and generating more renewable energy.
▪ Public safety: The town will equip police patrol cars with a Havis Idle Manager, which allows officers to turn off their engines but keep critical components running, such as lights, radios, laptop computers and in-car video systems. Roughly $650,000 is budgeted for a new firetruck and $336,000 is set aside for six new police cars.
This story was originally published June 6, 2021 at 8:00 AM.
