Local Governments Consider Budget Cutbacks

Local officials trying to pound out a budget put frustration aside and worked on ways to minimize budget cutbacks, including increasing taxes and delaying county contributions to capital projects and affordable housing initiatives.

Orange County Manager John Link presented the county's budget proposal and gave the prediction that during the 2002-03 fiscal year, Orange County will have to deal with a $750,000 increase in the cost of Medicaid, a $1.5 million increase in education spending and a $1.2 million increase to retain employees.

County property taxes could increase by 4.5 cents because of a growing tax base. The amount of funds the county has available for appropriation has fallen by $1,141,596. Sales tax revenue is unknown because officials cannot predict the rate of economic recovery in the coming year.

Orange County Commissioner Alice Gordon said the county planned its budget around receiving state reimbursements and without them, taxes could go up another 3 cents.

"But we're not trying to raise taxes," Gordon said. "Taxes will only increase if we don't get the reimbursements."

If the county does not get the $3.1 million in reimbursements, officials plan to withhold payments to the county's affordable housing initiative.

But even if payments are withheld, the affordable housing program would still have $1.3 million set aside for projects next year. The county would simply not make its usual yearly contribution to the fund.

The county's municipalities also are expecting to raise taxes to deal with budget problems.

Carrboro is predicting a 7-cent tax increase, Chapel Hill is predicting a 6.6-cent tax increase and Hillsborough is predicting a 6-cent increase. The towns, unlike the county, did not incorporate state reimbursements into their budgets.

The state withheld $1.4 million in reimbursements from Chapel Hill this year and $300,000 from Carrboro.

Officials at the meeting Monday night also had their fingers crossed that the state would not yank a promised city-town utility franchise and beer-wine taxes from municipalities as it did last year.

But Rep. Verla Insko, D-Orange, warned of possible cuts in the N.C. Department of Health and Human Services that could cut home and community care block grants by $1.5 million and would have a direct impact on the elderly, who depend on in-home services.

Other potential cuts are in areas of mental health and enforcement of child support payments, Insko said.

Carrboro Alderman Jacquelyn Gist criticized the state for considering the cuts, when municipalities are being forced to raise taxes. "(The state) is avoiding the political consequences of raising taxes and putting it on us," Gist said. "It's a very politically cynical move."

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