NEW HANOVER COUNTY — New Hanover County commissioners’ debate over whether to dip into a pot of money set aside from the hospital sale in next year’s budget is halted preliminarily.
The county’s elected leaders indicated at this week’s agenda review meeting they did not want to use the Revenue Stabilization Fund’s finite dollars to support recurring expenses.
READ MORE: Commissioners debate how to balance budget, tax rate remains same for now
“This is an opportunity to do what I believe is the right thing and right size the amount of revenue that’s coming into the county to take care of those deficiencies,” Commissioner Rob Zapple said. “I’ll say loosely, the credit card, with our Revenue Stabilization Fund, to me, is not the appropriate thing to do.”
Since the fund’s establishment, the county has used interest generated on top of its corpus amount of $300 million to offset budget costs. Using the corpus, however, will deplete the fund eventually and reduce any additional money it brings in through interest.
But without the fund, the county is facing a budget deficit based on the current tax rate of 30.6 cents. Despite a 60% rise in property values on average, the 30.6-cent rate resulted in $36 million in budget reductions and dozens of staff layoffs. As costs have increased, it leaves the county two options for the 2026-2027 budget — cut expenses or raise revenue through a higher tax rate.
New Hanover County staff presented two scenarios to commissioners Thursday: one, the tax rate stays at 30.6 cents and the Revenue Stabilization Fund is used and, two, the tax rate is raised by 2 cents and the fund isn’t used.
In the first scenario, staff included priorities commissioners previously indicated they would like to see in the budget:
- $2 million to reinstate commissioners’ commitment to workforce housing
- Additional $836,000 for New Hanover County Schools, on top of an additional $2.26 million, meeting them at their ask
- $916,500 to restore pre-K funding to former levels, restoring six classrooms
- $300,000 in funding for the Community Justice Center
- $650,000 for the economic development, including to the Arts Council of Wilmington and New Hanover County
[After press Rhonda Bellamy reached out to Port City Daily to clarify the Arts Council only requested $150,000 from the county.]
The proposal also takes into account a projected loss of $2.5 million in what the county expected to collect in property and sales tax.
“We are still pulling our property tax base to make sure that we have that number right,” budget officer Amanda Kostusiak said. “And as you have seen, our sales tax are coming in a little bit lower with higher reimbursement rates this year. So we’re just monitoring that, and we’re trying to be very conscious of getting our sales tax and our property tax base numbers, not the rates the base numbers are right.”
The commissioners’ priorities and the projected loss account for $7.2 million that would need to be pulled from the Revenue Stabilization Fund. Staff have also used $4.86 million from the Revenue Stabilization Fund for other budgetary items; so all-in-all, scenario one would need a little more than $12 million from the fund.
In scenario two, the workforce housing and arts council funding would not be included, meaning commissioner priorities would only account for $2 million, though the revenue loss of $2.5 million would still be in play. County staff have also included $6.65 million in “one-time revenue usage.”
“There is one-time money that we are getting through projects, through different interest earned to balance the budget; we’re pulling that out and making this scenario more holistic and financially sound,” Kostusiak said.
Scenario two would also eliminate all use of the Revenue Stabilization Fund, bringing the revenue gap to $16 million,made up with an additional 2 cents on the tax rate.
For the average New Hanover County home value of $580,000, a tax rate of 32.6 cents would add $9.67 to a homeowner’s monthly tax bill.
“What I’m saying is that to do the things that the board has identified … you would have to raise taxes if there is no use of RSF,” County Manager Chris Coudriet said.
Chair LeAnn Pierce responded: “No, there’s another option — you can reduce expenditures.”
Coudriet said while true, the commissioners indicated at the last budget workshop that option wasn’t on the table.
The commissioners indicated Thursday they weren’t looking to make cuts, though Pierce noted they really needed to contemplate raising taxes because the $320-million school bond that will appear on this November’s ballot, should it pass, may also require a tax increase next year. Coudriet and staff said they expect a need for 1.75 cents to accommodate the bond, if it’s passed by voters.
Pierce requested staff bring back several budget options without using RSF, including one where the tax rate stays the same and cuts are needed.
These options will likely come before the commissioners ahead of May 18, when the county manager is scheduled to present his recommended budget to the board.
[Ed. note: The article was updated after press to indicate $650,000 could be potentially allocated to economic development, including the arts council, instead of the full amount just to the arts council. PCD regrets the error.]
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