Chapel Hill council cuts penny from tax increase. $116.8M budget includes pay raises.
Chapel Hill residents will see a 2-cent town property tax rate increase — a penny less than Town Manager Maurice Jones had recommended in his budget for the fiscal year that begins July 1.
The Town Council approved a $116.8 million budget in a unanimous vote Wednesday and thanked Jones and his staff for working to limit the proposed tax increase.
The budget will restore many services that were cut last year when the COVID-19 pandemic hit and will give town employees a 3% pay increase. Roughly $71.5 million would cover the town’s day-to-day operations, with another $26.2 million budgeted for transit and $3 million for stormwater management.
The town also is expecting roughly $10 million in one-time federal American Rescue Plan Act money, which can be used to support struggling businesses and residents and help bridge budget shortfalls.
The town would get half of the money this year and the rest in 2022-23.
Property tax rate
The council approved a tax rate of 51.4 cents per $100 in assessed property value Wednesday, representing a 2-cent increase over the “revenue neutral” rate set following Orange County’s revaluation this year.
The owner of a property valued at $400,000 would pay a town property tax bill of $2,056.
Chapel Hill property owners also pay county taxes and a special Chapel Hill-Carrboro City Schools district tax at a rate of 18.30 cents. The Orange County commissioners tentatively approved a county tax rate Tuesday of 81.87 cents per $100 in property value.
Downtown property owners also pay a special Chapel Hill service district tax, which would be 6.4 cents per $100 in value.
A penny on the town’s tax rate could generate roughly $1 million.
The additional tax revenues will help fund deferred maintenance and infrastructure projects, such as street resurfacing, and help the town pay down its debts, Jones said. The town budget also is focused on climate action and social equity, he said.
Council member Jessica Anderson said the council should make sure next year that all public and nonprofit programs receiving town money submit information about how that money was used and the outcomes of those programs.
“I think that would be a really important way of seeing that we can no longer just rely on property taxes and that we have to give up things we care about, and we do get that we have to be selective,” Anderson said.
“I just think that we should be thinking about how we get the most bang for our buck and get the outcomes that we need, because we all have a lot of shared goals and hopes and things that we want to do,” she said.
Short-term rentals
The budget did not include money to buy software that could track short-term rentals and provide the town with more data. The council had expected a short-term rental permitting program to provide the money for that software, but Jones said Wednesday the money raised from permits will not be enough.
Council member Hongbin Gu suggested setting up a hotline to give residents who have concerns about a short-term rental in their neighborhood an alternative to calling the police.
The council is slated to discuss possible short-term rental rules again June 16, with a vote scheduled for June 23.
Other budget highlights
▪ Police department: The council has been under public pressure to cut the Chapel Hill Police Department’s budget and reallocate the fund to community services and a different kind of public safety response. This year’s budget includes $100,000 so the council can implement recommendations from the Reimagining Community Safety Task Force.
The budget also reduces the number of Police Department positions from 155 to 141 by eliminating vacancies and raises the starting pay for firefighters and police, and pay for existing staff to bring them up to the appropriate salary level over the next two years.
▪ Town employees: The budget includes a 3% pay increase for employees, a 5.5% increase in health insurance costs, and money to restart a Class and Compensation study, which will look at how the town pays its employees compared to other governments.
▪ Transit: $91,237 was included to hire a project manager for the North-South bus-rapid transit project.
▪ Affordable housing: The budget includes $2.2 million for public housing, plus $688,395 for affordable housing projects. The town also could spend the remaining $5 million from a $10 million voter-approved affordable housing bond.
▪ Climate change: $470,000 to start implementing the council’s recently adopted Climate Action and Response Plan, including new personnel positions and energy upgrades for town buildings.
This story was originally published June 9, 2021 at 9:21 PM.
