Manager Requests Tax Hike

The council met with Town Manager Cal Horton early Friday morning for a planning session in the Chapel Hill Public Library.

The annual planning session is a chance for Horton to present his findings about the town's fiscal outlook and propose solutions for any projected budget shortfalls.

Horton acknowledged that the 4.7 cent tax increase he brought to the table is much larger than usual, a fact he attributed to the national economic downturn.

"The forecast rate is unusually high -- uncomfortably high," he said, but he reassured the council that it was not set in stone. "This is just an economic model."

Horton's estimates about the town's fiscal outlook show that the increase in property taxes would be required to maintain the level of municipal services.

The need for increased revenue stems mostly from lowered expectations from town investments and state allocations.

Current tax rates of 50.4 cents per $100 valuation mean that an owner of $200,000 in property pays $1,008 each year to the town. The 4.7 cent increase would boost that bill by $94.

Such large property tax increases are rarely implemented by the council, which has until June 30 to work with the budget.

To begin the five-month process, the council members requested that Horton create a budget model without any tax increase that would show where services would be cut if no additional revenue is collected.

Once the town manager prepares a plan to meet revenue needs either by increasing taxes or cutting services, the council can begin to strike a balance. "(The no tax model) forces the town manager and the Town Council to look very carefully at the current expenditures and make sure they are high priority," said council member Bill Strom.

"There's just so much uncertainty that I would like to see the council re-evaluate everything."

Horton said a budget without any tax increases might frighten some town employees since it could mean layoffs or cuts in services. "What we always do is prepare the best budget that we can in order to continue the services that the council suggests," Horton said.

Town Council members made it clear that they probably wouldn't go with either a zero percent tax increase or the 4.7 cent increase. "As much as I wish we could do a no-tax increase this year, I don't think that's realistic," Strom said.

The town is already experiencing hiring freezes in the police, fire and public works departments because of a $975,000 shortfall in this year's budget.

Council member Flicka Bateman said she thought major service cuts or layoffs were only a last-case scenario for next year, especially in the police and fire departments.

"One never wants to cut in the area of public safety," Bateman said. "If we did have to, it wouldn't be the people on the front lines."

The City Editor can be reached at citydesk@unc.edu.