NEW HANOVER COUNTY –– A typically run-of-the-mill process was inflamed this week when New Hanover County Commissioners effectively passed a tax increase, with two commissioners splintering off from the anticipated state of affairs in favor of finding alternative revenue sources.
The now-approved $458 million budget is up $58.4 million from the current fiscal year, or about 15%.
To finance a variety of initiatives, including making New Hanover County Schools employees the highest-paid teachers in the state, the county opted to raise property taxes. The tax rate isn’t actually increasing (in fact, it’s going down by $0.08), but because of recent property revaluations, most property owners will end up paying more. Property values increased by an average of 33% as a result of this year’s revaluation; the last revaluation took place in 2017.
When counties adjust valuations to keep up with market conditions, they are obligated to publish the “revenue neutral” tax rate, which represents the taxable rate which maintains the same amount of revenue as the prior fiscal year. New Hanover County’s revenue neutral rate would have been $0.425, down $0.13 from the current fiscal year’s rate of $0.555. In approving a $0.05 increase above revenue neutral, county residents will likely see higher property tax bills. A home in unincorporated New Hanover County previously appraised at $250,000 and now valued at $332,500 will pay nearly $200 more in annual property taxes.
Salt in a wound
At a public hearing before adopting the budget Monday, commissioners took heat from residents, a sitting member of the N.C. General Assembly, and even a couple pickleball enthusiasts, who were unnerved their desired courts didn’t make it in the final budget.
Also a former county commissioner, Representative Ted Davis, R-New Hanover, told the board he was addressing them not as a state legislator but as a taxpayer and county resident. “Why is a tax rate above revenue neutral necessary… especially when there are other sources of funding available?” he asked.
The county could dip into its fund balance, or savings account, currently at about 20% of expenditures, Davis suggested. The state requires fund balances to stay above 8%.
Through the February $1.5 billion sale of the county-owned hospital to Novant Health, the county should have received $300 million for a revenue stabilization fund; this deposit was not reflected in budget documents. The county is set to receive $45.5 million from President Joe Biden’s American Rescue Plan (ARP) and New Hanover County Schools.
“There is absolutely no reason why these funds cannot be used,” Davis said.
“Finally, a real rub in the budget is your proposed salary increase … especially after increases in the value of taxpayers property due to revaluation,” he said. “This is like putting salt on a wound.”
Later in the meeting, Commissioner Jonathan Barfield, Jr. responded to Davis’ criticism: “I find that salt heals wounds.”
Full-time county employees will receive a $1,583 or 2.9% salary increase, whichever is greater, for a cost-of-living adjustment in the newly adopted budget. Separate from the budget, the county plans to use $6.1 million of its federal ARP funding for employee bonuses.
The county’s governing body (five commissioners and two full-time clerks) budget, which includes salaries and operating expenses, will increase by 23% in the upcoming fiscal year and is up 35% since fiscal year 2019-2020. Individual commissioner pay will increase from $17,000 to $31,000, according to WECT. At the meeting, Barfield said his pay has remained stagnant since first being sworn in on Dec. 1, 2008.
“Since I’ve been on this board, we have taken not one increase in pay for the last 13 years — not one,” he said. “How many of you all sitting on your jobs would work for 13 years to never see a pay increase? Good for you. I commend those that would have the fortitude.”
Imbursement for public officials is a tricky subject; low pay often means only retired or wealthy individuals can afford to run for public office and prompts officials to maintain side jobs, where conflicts of interest can arise.
A public investment
After commending several aspects of the spending plan –– ”there’s something in this budget for everybody” –– Commissioner Deb Hays motioned to postpone a vote until alternative funding sources were investigated. “I am concerned that we are raising teacher pay on the one hand and taking higher property taxes out on the other hand,” she said. “I believe that defeats the purpose.”
Hays’ motion earned the support of Commissioner Rob Zapple, who stood by the public investments and suggested a smaller effective tax increase. “All of this is possible,” he said. “But we need to put more work into this and not lay this entirely on the backs of the property owners.”
Chair Julia Olson-Boseman stood firm in the board’s $121.5 million investment in New Hanover County Schools –– an initiative she is largely responsible for pushing through. Per-pupil expenditures will increase 18% from $2,907 to $3,434 and local teacher stipends will more than double on average, from $4,183 to about $9,000.
“I don’t think there’s anything more important in this next year than educating our children. This past year has been horrific,” she said. “And I’m sorry if y’all don’t agree with that, but I’m not going to apologize for this budget for what we’re doing for education.”
Boseman said she and Commissioner Bill Rivenbark recently helped out with a 5th-grade cookout. “We were absolutely stunned by the poverty that exists,” she said. “I mean, stunned.”
She said she asked NHCS superintendent Dr. Charles Foust what could be done to help the impoverished children, and learned of a need for after-school transportation to help young students stay “off the streets” between the key time of 3 p.m. to 5 p.m. She motioned to adopt the budget and attribute $1.2 million in ARP funds for after-school transportation.
In a Facebook post, the New Hanover County GOP described the effective tax increase as “outlandish and irresponsible.” One GOP-backed Republican, Rivenbark, voted for it.
Rivenbark said he was proud of what the county was doing. “We’ve got school teachers that can’t afford to live in New Hanover County,” he said.
Hays’ motion to delay failed 3-2; Boseman’s passed 3-2.
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