NEW HANOVER COUNTY — The New Hanover County Commissioners passed its budget with a property tax rate of 30.6 cents after months of a push-and-pull between a revenue neutral rate and the county manager’s recommended 35-cent rate.
READ MORE: ‘Hardest decision I’ve ever made’: NHC commissioner chair no-go on budget vote, board still split
After almost three arduous hours discussing the budget for next fiscal year, the commissioners approved it 3-2 at their agenda review Thursday: Republicans Bill Rivenbark, Dane Scalise and LeAnn Pierce voted in favor, Democrats Rob Zapple and Stephanie Walker voted against.
Ultimately, the tiebreaker was Rivenbark, who indicated last week he may not be comfortable with cutting the budget down to reach the revenue neutral rate of 29.2 cents, citing cuts to New Hanover County Schools and the sheriff’s office would be necessary.
Come Thursday, however, the additional funding for both of those items remained untouched and he seemed to have made up his mind to compromise with a 30.6-cent rate. Gaining Rivenbark’s support marked a win for Scalise and Pierce, who fought for the rate to be as close to revenue neutral as possible.
“I think that a lot of folks are saying, ‘I’m cutting at home and you want more of my money so that the government can expand to provide more services to people for services’ that they don’t use,” Pierce said.
Coudriet’s recommended budget, presented in May, was based on a 35-cent rate, the amount needed to continue services at the same level and address growing responsibilities and costs.
Coudriet was then instructed to come back with a 33.9-cent option using different funds (Revenue Stabilization Fund, Mental Health and Substance Use Disorder, debt capacity) to balance the budget. Commissioner Scalise described the move as an “artificial” lowering of the tax rate — essentially saying the county was using non-recurring funds instead of living within its means.
The adopted budget still pulls from other funds, including $8.1 million from the county’s fund balance. This move will require the county to change its policy of keeping the fund balance between 18% and 21% of the overall budget; losing $8.1 million will bring the fund down to 16.7%, still double what the state requires.
Zapple worried changing policy would jeopardize the county AAA bond rating. Scalise said he didn’t think so, considering the rate was still double what the state requires.
Zapple said the rating is, in part, based on whether a municipality is willing to raise taxes to address needs.
“Because we have that [rating] we save literally millions of dollars every year in interest that we don’t have to pay because we’ve done such a good job,” Zapple said.
Chief Financial Officer Eric Credle confirmed bond agencies do look at this, along with other factors, but he didn’t think the county’s change in policy would be the “tipping point.”
Zapple and Walker also decried the things removed from the budget, Zapple calling the cuts “too deep.”
To reach the 30.6 cents, staff had to slash $36 million in recurring funding, including the county’s $3 million workforce housing commitment, $975,000 for six pre-K classrooms, $1.6 million in non-county agency funding, $875,000 in merit increases for high performing employees. The budget also dips into the fund balance for $8.1 million to offset the cuts.
The budget also makes a $9.86 million reduction in operational spending in almost every county department, affecting 82 positions. According to staff, 70 people will be let go as a result, though they didn’t divulge what positions.
“This does not represent the values of New Hanover County, this is a dismantling of everything we worked hard for,” Zapple said, urging commissioners to delay a vote until Monday’s regular meeting.
Both he and Walker said it would be unfair for the public and staff to vote on the budget right after the 30.6-cent proposal, not discussed before Thursday, was presented. Ultimately, the Republican-majority wanted to move forward with a vote, viewing continued debate as unproductive given the fundamental disagreements between the two factions.
“We all love, honor, respect our citizens, do everything that we, individually and collectively, think is best, and sometimes have disagreements on that subject,” Scalise said.
Scalise and Pierce have been adamant the county adopt a revenue neutral tax rate, meaning a rate that would bring in the same amount of money as last fiscal year. However, because costs have risen due to inflation and other factors, this amount wouldn’t be enough to pay for the exact same county services or amount of people.
Because 2025 is a property revaluation year and values have increased an impressive 67% on average, the county could bring in the same amount of money with 29.2 cents, compared to its current rate of 45 cents.
Even the 29.2-cent rate would raise tax bills for property owners, though every cent above the revenue neutral rate would equate to a larger increase. This is why Scalise and Pierce have fought to keep the rate down.
“We had a revaluation that for many people, has dramatically increased their property,” Scalise said, noting he’s heard concerns from homeowners that simply cannot afford the increase. “And I do want to say that even if somebody is renting… that will be tacked on to them.”
Both Republican commissioners argued the cuts they were in support of making were the consequence of “growing government.” However, Walker, Zapple and Coudriet at times, argued the recommended budget was not full of bloat and unnecessary additions, but rather the amount needed to continue operations.
The adopted general fund budget, funded primarily through property taxes, represents an $11-million increase over what commissioners approved last year — $448 million.
Though in reality, the county is ending the year with general fund expenditures at $497 million. This is because commissioners have approved additional spending over the last fiscal year; thus, the budget approved Thursday is a reduction from what the county is spending money on now.
This technicality was one of the main points of contention during Thursday’s debate, with Pierce and Scalise insisting the approved budget was an increase in spending, the $11 million enough to cover inflation and rising costs.
Ultimately, county manager Chris Coudriet agreed the proposed budget was a reduction.
“I do not want you to believe that your budget is $48 million more on July 1 than it is on June 30 — that is fundamentally not true,” Coudriet said, though acknowledging the commissioners had the right to reduce the budget based on policy priorities, they just needed to identify them.
Scalise and Pierce stated they weren’t on the county commission when some priorities were voted on to fund, including the five-year workforce housing commitment and the expansion of pre-K classrooms in 2020.
However, Pierce, Scalise and Rivenbark voted to expand the county’s library system with the $9.3-million Northchase addition and the $60.5-million Project Grace, a public-private partnership with Cape Fear Development to renovate the downtown library, plus add a museum and housing. More recently, all three commissioners (along with Zapple and Walker) voted to approve the county’s $3.8-million of the 60-acre undeveloped Flossie Bryan in midtown Wilmington.
Both libraries and the Flossie Bryan land, to be preserved as community greenspace, will require additional resources and staff to manage.
Scalise has been clear he believes the county should focus on funding core services; neither libraries nor parks are mandated by law. Though the commissioner has identified some areas where he thinks the county could shore up money, including cutting workforce housing and non-county agency funding (though the New Hanover County Endowment is picking up the latter). However, much more would need to be marked for elimination to reach the revenue neutral rate.
Both have insisted county staff could find other places to trim, though Coudriet has said the desired cuts couldn’t happen with small cuts here in there, but only in broad policy changes only commissioners could make. Scalise revealed at Thursday’s meeting he never intended to agree to a budget above 30.9 cents.
“I did have to make clear that I was not going to go above 30.9, but I also said, ‘I want this to be as close to 29.2 as we can reasonably achieve, it landed at 30.6 based on the priorities that the three of us [Scalise, Pierce, Rivenbark] communicated, because ultimately, this budget is driven by at least the majority of the board,” Scalise said.
Port City Daily reached out to both Pierce and Scalise last week requesting they provide what they think should be cut from the budget to reach a revenue neutral rate, or essentially, identify $40 million in funding to eliminate.
Scalise responded, saying he didn’t have anything to add. Pierce did not respond.
The cuts
All commissioners were concerned with one item part of county staff’s elimination proposal — upgraded 911 software, considered 30 years out of date. Staff were proposing to delay the $2.3 million expense by one year, though this raised public safety alarms.
Zapple said the delay would be “irresponsible” and could jeopardize lives if the system were to break down. Scalise responded this was “inflammatory.”
“I don’t believe that if the 911 center is going to fail tomorrow that y’all want to put it out,” Pierce said.
Coudriet said there was not a risk to operational responses, though he did say the item was the last thing out of the budget, insinuating it would be the first thing put back in if more funding was identified — which it then was.
“I think whenever we talk about priorities, a better priority for this community would be for us to pay for the 911 improvements, rather than a government run grocery store,” Scalise said.
Scalise was referring to the $2.1 million in funding for the county-funded Northside food co-op. The county committed to bringing a grocery store to downtown’s Northside, considered a food desert, since 2020, but only last year got a needed funding boost from the New Hanover Community Endowment.
However, Pierce said the Endowment has “pulled back” on the project, something Coudriet then said he shared with the commissioners “informally.”
Earlier this year, the co-op did announce it was pausing work on the co-op to analyze its business model in light of the grocery store coming to Chestnut Street. However, food co-op project manager Cierra Washington said this move was fully supported by the county and Endowment.
Port City Daily reached out to Washington and the Endowment Thursday for confirmation that the Endowment had “pulled back” its funding.
An Endowment spokesperson responded: “While the situation regarding the Northside Food Coop project is dynamic, the Endowment’s commitment to food security is steadfast, and our interest in supporting efforts that address food insecurity in the Northside community is unchanged. To that end, we will continue to work with our local partners, such as Growing Resilience.”
There was also much discussion on the loss of pre-K classrooms and the workforce housing initiative. Zapple and Walker said larger discussions were needed on both.
The workforce housing plan was a five-year commitment of $15 million to support the effort, with funds being used for loans and grants to developers and organizations.
Zapple said. “Frankly, I thought it’s a pretty darn-good plan. It kept our involvement at a very minimal amount of created data over a five-year period that would show us where we need to focus…this gave us the focus and the data that would support solutions, and we’ve been really successful leveraging over $150 million in private investment. Show me another county program that has done as good as that.”
Pierce noted the Endowment has stepped up to the plate with housing, adopting a $19 million strategy last year.
As for pre-K, staff explained commissioners chose to double its classrooms, going from six to 12, in 2020 using American Rescue Plan Act funding. Now that the funding has expired, the county is forced to pick up the expense in its general fund or cut it.
Pierce pointed out this was a similar move that put New Hanover County Schools in the tight spot it was in last year, facing a $20-million shortfall after Covid-19 relief dollars expired. Scalise agreed.
“We made permanent policy decisions based on temporary dollars, and eventually you have to reconcile that, and we have a difference of opinion about how to reconcile that,” Scalise said.
“So we throw our children overboard?” Zapple questioned, noting 100 kids would now not have a classroom.
Pierce suggested NHCS should have applied to the Endowment for the funding.
Other things eliminated or shifted in to balance the adopted budget include:
- $180,000 for 2 additional positions at the Senior Resource Center and 1 additional at Veterans Services cut
- $965,000, or all, of contingency funds
- $3.7 million in the MHSUD fund for school nurses, decreasing the number of nurses to the state standard
- $250,000 for Community Justice Center rent eliminated
- $318,000 in court video equipment for first appearances eliminated
Additionally, $13.7 million in recommended enhancements were canceled, including:
- $266,000 for the Board of Elections
- $18,000 from health and human services
- $110,000 for an IT engineer
- $25,000 for museum staffing
- $328,000 for a parks and gardens crew leader, various projects
- $35,000 for a passport agent
- $41,000 for floodplain software in the planning department
- $35,000 part-time Soil and Water District coordinator
- $750,000 to modify the Northchase library service model – all libraries will experience a staff reduction as a result
- $1.15 million to reduce social workers to state requirement
- $548,000 to increase the salary lag
- $500,000 to reduce discretionary budgets
Reach journalist Brenna Flanagan at brenna@localdailymedia.com.
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