Chapel Hill, Orange County homeowners will pay higher taxes next year. Here’s why.
Orange County and Chapel Hill property owners could pay higher taxes this year to fund employee pay raises and the increasing cost of services, supplies and education.
Chapel Hill and Carrboro residents also will pay higher rates for water and sewer service.
County Manager Bonnie Hammersley presented her draft $294.4 million general fund, or operating, budget to the commissioners on Tuesday night. The budget includes a 2.81-cent property tax rate increase and some department budget cuts.
Chapel Hill Town Manager Chris Blue presented his $156.2 million draft budget and a proposed 2-cent property-tax-rate increase to the Chapel Hill Town Council on May 2.
A half-penny of the town tax rate increase would fund a 14% increase in Chapel Hill Transit’s budget for supplies, repairs and drivers. The town is budgeting $89.4 million for day-to-day operations.
County cuts spending, uses savings
The county’s proposed budget also covers rising costs and employee pay, while accounting for slower sales tax growth and the loss of pandemic and state Medicaid funding, Hammersley said. It includes $108 million for schools and a 4% pay raise for county employees.
Roughly $7 million in unallocated fund balance — the money that county departments save each year — is used to fill the gaps.
Every county department will need “to be exceptionally vigilant and disciplined in managing their budgets next year,” Hammersley said. The county will also have “less flexibility to respond to unexpected needs,” she said.
The boards will hold multiple work sessions and public hearings before voting to approve their respective 2024-25 budgets. Local government budgets take effect July 1.
How will higher tax, OWASA rates affect residents?
▪ Orange County: The budget would set a new county tax rate at 86.34 cents per $100 in assessed property value. That would generate a $4,317 tax bill for the owner of a $500,000 home — or $140.50 more than the same homeowner paid last year.
▪ Property owners in Chapel Hill, Carrboro and Hillsborough also pay town property taxes, and those in the Chapel Hill-Carrboro City Schools district pay a special tax. Property owners who live in the Orange County Schools district do not pay a school tax.
▪ Chapel Hill: The proposed town property tax rate would be 59.2 cents per $100 in assessed property value — $2,960 for the owner of a $500,000 home, a $100 increase.
▪ OWASA: Chapel Hill and Carrboro residents will also see Orange Water and Sewer Authority rates increase. The proposed $33 million budget includes a 15% rate hike — adding $12.32 a month to the bill for 3,000 gallons of water and sewer service. Rates change Oct. 1.
A public hearing is scheduled for 6 p.m. May 9 in the OWASA Community Room at 400 Jones Ferry Road in Carrboro. The meeting will also be livestreamed on YouTube.
▪ Property tax bills are mailed out in late summer and due by Jan. 1.
What do Chapel Hill-Carrboro, Orange schools get?
▪ Local schools budget: $108 million — about $5.2 million more — for the Chapel Hill-Carrboro and Orange County school districts.
▪ Per student: $5,666, an increase of $320 for each student.
▪ Chapel Hill-Carrboro schools: $63.1 million — a nearly $3 million increase, but shy of the $8.4 million increase requested. CHCCS also gets roughly $28.4 million from a district property tax — 19.8 cents per $100 in assessed value.
▪ Orange County Schools: $45 million — a roughly $3 million increase. The district asked for $5.8 million.
▪ Charter schools get a total of $7.5 million for 1,322 local students.
▪ Commissioners and school boards budget work session May 16.
Bond referendums on the November ballot
Chapel Hill and Orange County will ask voters on Nov. 5 to approve separate bond packages for critical needs and construction, including new fire stations and school upgrades. Future tax rate increases may be needed to repay the debt.
▪ Chapel Hill: A $44 million bond with $15 million for two fire stations, $15 million for affordable housing, and another $14 million for recreation, sidewalks and a greenway project.
▪ The Chapel Hill Town Council will vote May 15 on $6.5 million for a ladder firetruck, leased space for the Police Department, and the East Rosemary Street parking deck.
▪ Orange County: A $300 million bond could address some of the nearly $1 billion in school repair, replacement and maintenance needs identified in a 2023 study.
What to know about Chapel Hill’s budget
▪ Property taxes pay nearly half of the town’s daily expenses, and sales taxes cover about 26%.
▪ Amy Oland, business management director, said inflation and higher costs are adding 3% to 5% a year to town operating costs. The town has also borrowed more money to build a new parking deck and address backlogged critical needs.
▪ UNC pays about a third of the $36.7 million transit budget. Chapel Hill and Carrboro pay over $10 million, and a countywide half-cent sales tax pays about $7 million.
▪ $2.8 million for affordable housing and $2.7 million for public housing.
▪ Town employees would get a raise based on 6% of the market rate for their position, to keep up with higher pay in the Triangle.
▪ What’s next: Chapel Hill budget public hearing, May 15; Chapel Hill council vote, June 5
What to know about Orange County’s budget
▪ Recreation fees could increase for the first time since 2009 by an average of 22% to address higher costs for concessions, wages, equipment rental and repairs, electricity, supplies, grounds maintenance, and uniforms. More and expanded programs are planned.
▪ A $52.6 million Human Services budget includes $26.5 million for the Department of Social Services, $13 million for the Orange County Health Department, and more money to help lower-income parents pay for childcare.
▪ A $41.1 million Public Safety budget includes $21.1 million for the Sheriff’s Office, mostly for overtime pay, and nearly $17.8 million for employee pay, overtime, and the cost of supplies and equipment in the Emergency Services department.
▪ The county’s Southern Branch Library could open this year in Carrboro. The budget includes $590,316 for six new jobs and books, materials and supplies.
▪ Three Fire Districts asked for a tax rate increase: Eno, 2-cent increase (11.98 cents per $100 in assessed property value); New Hope, 1.27-cent increase (13.84 cents per $100 in value); and Orange Rural, 1-cent increase (11.49 cents per $100 in value)
▪ What’s next: Public hearings, May 14 and May 30; Draft budget resolution, June 6; Commissioners budget vote, June 18
The story will be updated as more local governments release their 2024-25 budget plans.
This story was originally published May 2, 2024 at 10:53 AM.
CORRECTION: An earlier version of this story should have said Chapel Hill’s proposed budget would include roughly $2.7 million for capital needs and $36.7 million for transit.
