NEW HANOVER COUNTY — A budget debate among county commissioners fell along predictable political lines Monday as several Republicans expressed discomfort with how far the current recommended tax rate remains from the revenue neutral option.
READ MORE: 10 cents sheared from NHC tax rate in first recommended budget: Here’s how staff got there
“My goal, from the very beginning, has been to try to get us as close to revenue neutral as possible,” Commissioner Dane Scalise said. “But there are some additional items that push this out from 30, 31 into 35 [cents] that I’m not happy with.”
After this year’s property revaluation that brought home values 60% higher, county budget staff determined it could bring it the same amount of revenue by reducing its tax rate from 45 cents to 29.1 cents. The latter amount, however, does not account for inflationary demands and other increases to the budget to continue the same services; thus, the county’s first recommended budget set a 35.5-cent rate.
At Monday’s session, staff reported it could further shave off half a cent from the recommended rate after locating $4 million in surplus or unsupported areas of funding. This included net New Hanover County Schools expenses, reduced vehicle purchases and reduced contingency. Each cent of the tax rate is equal to $8 million.
Scalise did not disparage staff’s work on the budget so far, but he and Commissioner LeAnn Pierce made it clear they would question every cent recommended above the revenue neutral rate.
Chair Bill Rivenbark chimed in with his similar wishes, noting staff should bring commissioners a revenue neutral budget with suggested cuts.
Staff did make note of additional general fund cuts that could be performed. These included issuing debt for some of its capital outlay expenditures totaling $8.14 million, though this would cost the county more in the long run due to interest.
The commissioners could also choose to fund school nurses by taking $3.7 million from its Mental Health and Substance Use Disorder Fund, used in the current budget, to cover some of the nursing costs. This is a short-term strategy, as the fund — created from the hospital sale to Novant — is finite.
County Manager Chris Coudriet said he was wary of recommending further eliminations to established funding streams because he didn’t want to assume the commissioners’ policy priorities.
Commissioner Rob Zapple pushed back on his colleagues’ indication that a tax rate above revenue neutral is frivolous.
“I believe the 29.1 cent, accepting this as revenue neutral, is artificially low, and it is a result of years of coming down in different departments,” he said. “What we’re not seeing is in years past, because whatever pressures were put on to different departments, they’ve been holding back and cutting what we don’t see, and yet we’re still offering the same level of service.”
Still, Scalise said he would like to see a third-party auditor make recommendations of where to cut spending. Pierce agreed, though worried about the time it would take to complete; the county budget must be passed by June 30. The idea wasn’t discussed further.
However, commissioners will be provided a checklist that shows savings based on each reduced line item. Commissioners will be able to input their priorities and bring back suggestions for cuts.
NHCS
In a much less nerve-wracking process than last year’s battle with the $20-million shortfall, New Hanover County Schools has submitted its budget request to the county, including an additional $8 million in operating expenses and $19.43 million in capital needs.
Much of Monday’s discussion revolved around the capital budget, as commissioners already discussed the recommendation to provide $4 million in operating costs — $3 million to address inflation changes and $1 million for school safety measures. The latter includes four safety officers, metal detectors and classroom behavioral training.
The other half is for a two-year pilot (though $4 million is only for one year) that would put on additional specialized employees in each school. In conversation with district leaders, Coudriet said the program was pitched as a “proof of concept” with the goal of obtaining outside funding, potentially from the New Hanover Community Endowment. From there, he said the intention was for the state to pick up funding.
Commissioners on Monday expressed concern about coming back to the county for funding after the two-year trial if the state refuses to cover the costs. They pointed to the county’s coverage of additional positions in the last budget cycle as the board grappled with cutting hundreds of employees, in part due to Covid-19 relief funds the school board knew would expire.
“They’re not going to let those people go after two years,” Rivenbark said.
As for capital, Coudriet is suggesting the county dole out the $19-million ask over a three-year period. This year’s budget allocation is recommended at $2.6 million.
“We, from a review perspective and also based on lived history, do not believe the school system has the capacity — and I don’t mean that in a negative way, there’s only so many people and so much work that can be done — to execute on the number of projects that make up the 19 million,” Coudriet said.
The county manager instructed staff to take out potential bond projects — as the school board considers a November 2026 bond — and separate the remaining capital projects by urgency. Coudriet noted neither the superintendent nor school board has been presented with this plan and could disagree with it.
He clarified he was not doubting the district’s emergent needs, but that almost $20 million was tough for the county to issue, especially considering the district has a little more than $13 million in earmarked, yet unspent, capital funds.
Most of the commissioners agreed with Coudriet’s assessment, Zapple noting the district’s facilities team is currently an “empty bench” due to retirements and relocations.
“I’m surprised they even came to us with that,” Zapple said.
The commissioners also discussed the school district’s request to renegotiate an agreement it made with the county in September 2024. Essentially, the MOU is an affirmation that the county will financially back the school district in an emergency.
NHCS is now looking for the MOU to have more teeth, essentially requiring the county to chip in if the district suffers damage exceeding $500,000.
Coudriet said the request stems from a “deficit of trust” NHCS has with the county. Commissioner Stephanie Walker — a former school board member — explained it stems from 2018’s Hurricane Florence, when the district spent down a good chunk of its fund balance for repairs. Walker said she interpreted the district’s negotiation request as an assurance the district has accessible funding on day one of a disaster, rather than having to wait for commissioners to approve it in a meeting, which could be delayed in the chaos.
Still, commissioners were overall unsupportive of the action.
Reach journalist Brenna Flanagan at brenna@localdailymedia.com.
Want to read more from PCD? Subscribe now and then sign up for our newsletter, Wilmington Wire, and get the headlines delivered to your inbox every morning.
