County Manager Gives Insight On Proposed Tax Increase

County Manager Gives Insight On Proposed Tax Increase Featured

By / Local News / Wednesday, 27 May 2015 04:00

By WILLARD KILLOUGH III
Managing Editor

NEW HANOVER CTY - The New Hanover County Board of Commissioners will meet again May 28th to discuss a budget proposal they received earlier this month for the upcoming fiscal year 2015-2016. The proposal includes a 5-cent property tax increase. At the their May 14th, regular meeting the majority of commissioners expressed concern with the proposal and wanted more information in hopes of finding a way to avoid the increase. The budget must be adopted by the end of June. The fiscal year starts July 1st.
County Manager Chris Coudriet said the proposed five cent property tax rate increase will help pay for multiple bond referendums approved by the voters since 2006.
Coudriet said, "It's not a secret that I'm asking or recommending to the Board to raise the property tax. I could only do that knowing with 110% confidence that we had analyzed literally very line item and driven out unnecessary cost."
He said the $306.6 million  dollar budget presented is consistent with the direction of the Board based on prior meetings in March and the 2011 strategic plan.
He said there are many things that prior Board's of Commissioners, "Have done to make things better... and we are continuing meet those obligations as well."
Following the meeting Coudriet further explained his decision to recommend the tax increase.
He explained, "It was not an easy ask and not something I did without great care and concern, but I did recommend to the board to raise the county’s property tax rate by 5 cents, which would bring the county’s overall property tax to 60.5 cents per $100 of value effective July 1, 2015. If the board accepts my recommendation, the additional 5 cents would cost the taxpayer on the value of a $250,000 home in New Hanover County $125 more next year."
Coudriet explained the average sale price of a home in todays market is $238,000 and that would cost a taxpayer around $119 more. He explained the median sales price of $190,000 would cost a taxpayer $95 in additional yearly property tax. For a $215,000 home, an owner would pay $108 more.
He explained, "The obvious and fair question, why are you recommending a 5 cent tax increase? Simply stated, I don’t see another sustainable alternative to meeting the county’s ongoing obligations. A quick or deep dive into the budget will demonstrate the overall increase in next year’s budget is below the rate of growth in the economy – I’m proposing a budget for fiscal year 2015-2016 that spends only 1.3 percent more next year than the current year, and this is after the recommendation to increase funding for public education by an average of 7 percent. We accomplish the total, limited growth of the proposed budget by reducing spending on a range of other fronts to include cuts in the Cape Fear Museum (a county owned asset), the public library system, parks and gardens, public health, social services, and others."
He explained, "If the board accepts my recommendation to adjust the property tax rate, I can assure each of you the new dollars raised will only be used to pay for voter-approved debt obligations, and specifically, voter-approved debts from 2006 and 2008. It’s been a while ago, but in 2006, 67 percent of those voting approved an $18 million county park bond for mostly improved parks facilities in the unincorporated county, and in 2008, 62 percent of those voting approved a $164 million community college bond for new facilities downtown and on the north campus near the I-140 by pass. For the fiscal year that beings July 1, 2015, the county will be paying fully on the principal and interest for the $182 million approved by the voters. That equals $15,030,000 in debt payments next year, and the 5 cent tax increase will raise the revenue ($15 million) to pay that debt obligation."
Coudriet explained the proposal doesn't ask for additional revenue and even includes a decrease for the fire service district tax for those people living in the unincorporated area of the county outside of city limits.
Additionally, just like last year's budget, there is a recommended reduction in tipping fees for solid waste disposal at the county landfill.
Coudriet explained, "Specifically for those who receive their fire protection from the New Hanover County Fire District, I’m recommending a fire service tax of 7 cents per $100 of value; currently you pay 7.9 cents. For all of us, the cost to dispose of solid waste next year, if my recommendation is accepted, is $52 per ton versus the current tip fee of $55 per ton."
During the Commissioners May 14th, meeting, Coudriet explained, "New Hanover County’s property tax is mostly unchanged since FY08-09, which includes the 1.3 cent tax increase in FY10-11 for lost revenue after the recession, and the revenue neutral tax rate for the current 55.4 cents established after the 2012 revaluation when the County lost approximately 15 percent of its property tax base. In the same time, the County has begun to pay fully on the $182 million in bonds the voters approved in 2006 and 2008. Today, the County’s effective property tax rate is 51.70 cents and not the actual rate of 55.4 cents."
Commissioner Woody White explained, "A 5-cent tax raise is an immediate transfer by a vote from this body of $15 million dollars from the local economy into our checking account as a local government and that's the wrong thing to do." He said, "Particularly when we believe, at least I do, with cash management, looking at our projections, holding the line on spending and doing the things we can do and take advantage of the unique situation we are in which is a growing [tax base] and all of these projections moving in the right way and maybe with the benevolence of the Local Government Commission (LGC) that we can do it without raising taxes."
He said, "When voters approve bonds - I think there's the context of what staff and some others believe that to be - is that they are approving a tax raise. I tell you now, I talk to a lot of citizens that say 'I vote for bonds but I also expect my commissioners to budget within the confines of the money that they are given and within the parameters of the increases in revenues that they enjoy every year without raising my taxes."
Part of the budget presentation showed the proposed tax increase bringing New Hanover County more in line in comparison to tax rates of other "peer" counties in North Carolina.
White said, "I am proud of that and that is not a justification in my opinion for raising taxes to get closer to some of our peers. The further we are apart form our peers on that metric the better it is for our local economy and our citizens."
Commissioner Skip Watkins explained, "Similar to Commissioner White, the last thing I want to do is vote for a tax increase especially thinking that half of our county population is going to enjoy a two and half to three cent tax increase from the Wilmington City Council as well. While that is not our purview. That's not our responsibility. I still think we need to be aware of that extra coming out of the city residents pockets as well."
Watkins said he wants to talk about some of the budget line items to look for ways to save money. He said, "I think our citizens sometimes have a disconnect between when they vote for a bond and the fact that the bill is going to come due some day."
He said educating the voters on the future impact bonds have on the property tax rate is important. There have been $342 million dollars in bonds issued over the last 8 years since 2006.
Commission Chairman Jonathan Barfield said, "There's a phrase that everybody wants to go to heaven but nobody wants to die. And everyone comes to our community wanting certain amenities and at the same time those amenities must be paid for. I have a hard time believing that voters in our community are that naive that they are not educated enough to know that if they pass a total of $342 million dollars worth of bonds that they don't have to be paid for. I give the citizens of community much more credit than that."
He said voters were very aware of the future impact recent transportation and school bonds would have on their tax rates when they gave approval at the polls last November.
Barfield said, "I've been on this Board going on seven years now and in that time frame we've only raised taxes one time and that was by 1.3 pennies. There was one year I voted against the budget because it did not have a tax increase to cover the bonded debt that was issued for Cape Fear Community College. The argument I had with my colleagues then was, you can't continue to issue these bonds without paying your bills."
He said, "When I hear people talk about they are fiscally conservative I really don't know what that means. Because fiscally conservative does not mean you don't spend money, that means that you get a good return on your investment. When I look at the dereliction of duty of past Board's who called themselves fiscally conservative but allowed Wastec to go to utter ruin and disrepair to where it cost the taxpayers millions of dollars, that's not being fiscally conservative."
Commissioner Beth Dawson said she wants staff to take a harder look by double checking figures and checking to see if some county debts could be refinanced or converted to interest only loans.
She urged staff to review the proposed budget to ensure they know what they have to pay in terms of "wants" verses "needs" and prioritize those items. She said, "Then we know what we need to pay for and our responsibilities to the public to provide the services that we all enjoy."
The County Board of Commissioners will vote to adopt a budget prior to the start of the 2015-2016 fiscal year on July 1st.
The New Hanover County Board of Commissioners will hold a Budget Work Session on Thursday, May 28, 2015, at 10:00 a.m. at the New Hanover County Government Center, Harrell Conference Room, 230 Government Center Drive, Wilmington, NC.

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