Tax rates in town, county may rise

For the first time in five years, Orange County is considering a hike to its tax rate.

During a planning retreat on Friday, the Orange County Board of Commissioners reviewed its proposed $180 million budget for the 2013-14 fiscal year.

To fill a $1.7 million deficit, the commissioners discussed a 1.1 percent property tax rate increase — which could further cement the county’s place among the highest property tax rates in the state.

tax increases

1.1 percent
proposed county tax increase

$1.7 million
county budget deficit

Chapel Hill’s budget deficit for upcoming fiscal year.

Under the proposal, taxes would increase by $27.50 per year for a $250,000 home.

The last time the county changed the tax rate was in 2009 to lower it to its current rate of 85.8 cents per $100.

Facing a potential $880,000 budget deficit, the Chapel Hill Town Council is also discussing a tax increase.

During the council’s planning retreat Saturday, Town Business Management Director Ken Pennoyer released estimates that revenues would reach $53 million during the 2013-14 fiscal year — a 1.7 percent increase from last year.

But the town will also take on several larger budget items in the next year, including costs associated with the expansion of the Chapel Hill Public Library and changes to solid waste as the Orange County landfill closes.

Council member Lee Storrow asked if town staff could consider creating fees for certain services provided by the town.

But Town Council member Gene Pease said that wouldn’t be enough.

“I think the reality is that we’re going to have to make some really hard decisions,” Pease said. “It’s obvious they’re really big numbers.”

Some council members worried about the effect a tax increase might have on residents if Orange County also implements a tax increase.

“We’ve known this was coming,” Pease said. “We’ve known this for two years. And last year staff pulled some rabbits out of their hats so we could get away with no tax increases.”

Problems with priorities

The Chapel Hill Town Council also got an in-depth look at its priority budgeting system — and some council members weren’t pleased.

The new system allows the council to rank budget priorities into broad categories, enabling the town to adjust department budgets individually rather than make across-the-board cuts.

Council member Sally Greene said she was concerned council members weren’t aware what the priorities encompassed.

Greene used the town’s library as an example, which she said could be classified under public infrastructure or economic development.

During a previous meeting, the Town Council classified enrichment, which includes the library, as a low-priority item.

Greene said the system might have misled the other council members, who hadn’t intended for the library to be ranked so low.

Council members ranked 25 goals for their budget with development at the top of the list.

Environmental stewardship was ranked as the lowest priority.

Council member Donna Bell said these priorities needed to be flexible.

“In the end, what you want to do is that you look at your budget and it still meets with your values as an organization and as a community.”

Problems with poverty

The Board of Commissioners also discussed options to combat county poverty levels and clarify rural and urban poverty.

According to 2011 U.S. Census Bureau data, 16.9 percent of Orange County residents lived below the poverty level — compared to 16.1 percent statewide.

Commissioner Mark Dorosin placed an emphasis on the areas that have the most severe poverty levels.

“We have a rural half of the county and issues of rural poverty are different than issues of urban poverty,” Dorosin said.

Staff Writer Thompson Wall contributed reporting.

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