Chapel Hill property owners will pay higher taxes next year. Some budget highlights.
Chapel Hill property owners could pay higher taxes this year to fund employee pay raises and the increasing cost of the bus system and other town services.
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 Wednesday.
The proposed budget would spend $89.4 million on day-to-day operations and $36.6 million on capital projects, such as building maintenance and vehicle purchases. Property taxes pay for nearly half of the town’s daily expenses, with sales taxes covering about 26%.
A half-penny of the tax rate increase would cover a 14% increase in Chapel Hill Transit’s budget for supplies, repairs and bus drivers.
Amy Oland, the town’s business management director, said inflation and the higher cost of buying goods and paying employees is adding 3% to 5% a year to the town’s operating costs. The town has also borrowed more money to build a new parking deck and address backlogged critical needs.
On May 15, the council could approve $6.5 million in debt to buy a ladder truck for the fire department, move the Police Department into leased office space, and cover already approved spending for the East Rosemary Street parking deck.
Chapel Hill voters will decide in a bond referendum in November whether to use the rest of the town’s debt capacity to meet $44 million in needs, including $15 million for two fire stations. The council will decide Friday how much to spend on affordable housing, recreation, sidewalks and a greenway.
A penny on the town tax rate brought in nearly $1 million last year.
How will a higher town tax rate affect homeowners?
▪ The new 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.
▪ Tax bills are issued in late summer and due by Jan. 1. Chapel Hill property owners also pay stormwater, Orange County and Chapel Hill-Carrboro City Schools taxes.
▪ The county also could increase its tax rate and will have a $300 million bond for school building needs on the Nov. 5 ballot.
▪ All county properties will be revalued next year, which could mean higher property tax bills for some homeowners in 2025, and lower or largely unchanged bills for others.
Other budget highlights
▪ UNC would pay roughly a third of the $36.7 million transit budget. Chapel Hill would pay about $8 million, Carrboro would pay about $2.4 million, and the county’s half-cent sales tax would pay about $7 million.
▪ Housing: $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 in an ongoing effort to keep up with higher pay in other cities and counties.
What did council members say?
Council members continued to be concerned about how the town’s rising tax rate affects homeowners and renters who can least afford to live in town, especially as some of those increased tax dollars help build affordable housing.
Last year’s budget included $100,000 to help relieve the burden on some homeowners. Council members asked Blue if more money could be allotted to that need and also help renters, whose rents go up when property taxes go up.
Council member Elizabeth Sharp urged staff to examine whether the town is being as efficient as possible with its existing money.
Mayor Pro Tem Amy Ryan asked for an audit of the East Rosemary Street parking deck construction project, which ran $12 million over budget, to see how the town could better handle future projects. Staff also was asked to examine how the town will pay roughly $5.9 million to operate the North-South bus-rapid transit route when it opens.
What’s next
▪ May 1: Blue will present his final budget draft to the council
▪ May 15: The council will hold a budget public hearing
▪ June 5: The council could vote on the 2024-25 budget
▪ July 1: The new budget takes effect
▪ August: Orange County mails out property tax bills
