Chapel Hill’s $129M budget raises property tax rate, gives raises to employees
Update: The Chapel Hill Town Council passed an updated $129.3 million budget Wednesday, June 8, including a $74 million general fund budget. The final fiscal 2022-23 budget raises the town tax rate from 51.4 cents to 52.2 cents per $100 of assessed property value. The owner of a home assessed at $400,000 will pay $2,088 in town tax, a $32 increase, Below is the story about the initial proposed budget posted May 5.
Federal money, local revenues and a half-cent tax rate increase should cover a nearly 9% increase in Chapel Hill’s expenses next year and give town employees a healthy pay raise, Town Manager Maurice Jones said Tuesday.
“There is optimism for us that we’ve been through the worst of the pandemic, so we are now focused on how best to help our community recover from the effects of COVID-19,” Jones told the Town Council.
The $127.7 million budget includes $76.6 million for the town’s daily operations, with another $30.3 million budgeted for transit — a 15.3% increase over last year’s transit budget. The town also maintains separate funds for parking, stormwater, housing and other targeted expenses.
Over half of the town’s operations, or general fund, budget pays for police, public works and the fire department.
The half-cent tax rate increase will provide roughly $479,000 to help pay for transit expenses, Jones said. The town had roughly $106.9 million in debt as of March 31, he said. The town’s Debt Service Fund represents 8.8 cents of the property tax rate.
The town also anticipates receiving another $5 million in one-time federal American Rescue Plan Act money next year, for a total of $10 million in two years. Jones has recommended spending:
▪ $2.5 million each on affordable housing and homelessness programs, and on parks and recreation needs
▪ $1 million each on human services, bike and pedestrian infrastructure, building needs, and downtown revitalization
▪ $500,000 each on digital access and community-based projects, which the public will have an opportunity to suggest
Jones noted in his budget message that the town is “in a strong position to recover from the immediate impacts of the COVID-19 pandemic,” because of conservative budgets during COVID and “two years of historic sales tax growth.”
Sales tax revenues have grown 22.3% in the last year, Jones noted. A 3% occupancy tax levied on lodging also rebounded in the last year — by 66.7% to $1.2 million — following the COVID shutdown.
Next year’s budget is an opportunity to focus on long-term goals, including housing and homelessness, public safety, human services, economic development, parks and recreation, and the downtown master plan.
The proposed 2022-23 budget would take effect July 1.
What about property taxes?
The proposed budget sets the property tax rate at 51.9 cents per $100 in assessed property value — a half-cent increase over this year’s tax rate of 51.4 cents.
The owner of a property valued at $400,000 would pay a town property tax bill of $2,076, or an additional $20.
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 are considering a county tax rate of 83.12 cents per $100 in property value.
Downtown property owners also pay a special Chapel Hill service district tax, which would continue to be 6.4 cents per $100 in value.
A penny on the town’s tax rate could generate roughly $958,000.
What about town employees?
The town currently spends 62% of its operating budget on employee compensation and benefits. Employees who have worked for the town for less than five years could receive a 4% raise next year, while longer-term employees could get a 5% raise.
The raises are the result of a Class and Compensation study looking at how the town pays its employees compared to other governments. The budget also sets aside $200,000 for the next phase of the compensation update.
Roughly $355,540 would allow the town to hire four new employees: a grants administrator, planning technician, class and compensation analyst, and a diversity, equity and inclusion project manager.
Other budget highlights
▪ Downtown: The special district tax is expected to provide $397,000 next year for downtown improvements. The town also plans to transfer $100,000 from the general fund for downtown improvements.
▪ Getting around: $75,000 for pedestrian and bike safety; $50,000 for greenways; $36,000 to create accessible curbs; and $50,000 for the Vision Zero initiative, which seeks to eliminate traffic fatalities.
▪ Public safety: The town spends 34% of its operating budget on police and fire services. Next year’s budget allocates $15 million for police — a 12.6% increase largely to cover higher salary and benefit costs, but also because of increases in communication costs and the criminal justice debt program. The fire department could get $10.6 million — a 6.1% increase — due to rising personnel, vehicle fuel and vehicle maintenance costs.
▪ Parking fund: The town is relying on its parking fund to cover debt payments for the $39 million parking deck under construction on East Rosemary Street. The $6.1 million parking budget is an 83.8% increase over last year’s budget, and will require roughly $2.7 million from the town’s debt service fund, largely because COVID caused a significant drop in parking revenues downtown.
▪ Other funds: The budget allocates $688,395 to the town’s affordable housing reserve fund, and $550,000 to the Climate Action Fund. Another $2 million would go to the vehicle replacement and vehicle maintenance funds.
Budget hearings, vote
The council will hold a public hearing on the proposed budget May 18, and has scheduled work sessions for May 11 and May 25, during which council members can suggest additions and subtractions from the proposed budget.
The council allows public comment at work sessions only if time permits.
A vote to adopt the 2022-23 budget is scheduled for June 8.
This story was originally published May 5, 2022 at 6:00 AM.
