Per Ken Pennoyer, recently retired Town Finance Director, as presented to incoming new Council Members at the Jan 2, 2018 budget update meeting:
During the past 7 year period, 2010-2017, of constant property assessment, Town property tax revenue increased an average of 1.3% per year while Town services costs increased an average of 3.7% per year.
As determined from the Town’s “Development Activity Report”,
and associated records as compiled by Del Snow and Fred Lampe, the accompanying development growth during this 2010-2017 period was 82% residential, 15% commercial (office plus retail) and 3% institutional based on assessed property values.
Another email:
Chas,
First, your graph shows exactly what happened to property tax revenues vs services expenses. Sorry I can’t put hard $’s on the vertical axis — Pennoyer did not provide that specific data in the meeting.
Yes, tax rates have recently increased — but that is not the right question to ask.
1A. The way the Budget process works is first tax rates are reduced to “normalize” for the property assessed valuation increase that occurred in 2018. This then produces the same amount of property tax revenue as before the revaluation.
1B. Next the Town determines what amount of additional property tax is required to balance the budget. This step is when the tax rate is increased — and it was. Note that even after the tax rate was increased (as I recall it was increased by 1.6 ¢ per $100 assessed valuation) the rate was still lower than it was before the assessed revaluation in late 2017 because of the large increase in assessed property valuation.
1C. Yes, the property tax rate could be increased enough to close the gap between service cost and property tax revenue. Currently the Town is riding the “crest” of the increase in sales tax revenue to close the gap. The recent property tax increase is “justified” as needed to finance the $10 million bond that was approved to finance affordable housing (half the 1.6¢) and the remainder to rebuild the cash balance that Stancil “robbed” so as to not have a property tax increase before he left office — with approval from Pam who did not want a tax increase in her first term as mayor. Cash balance is used to pay back the debt that the Town accumulates from capital expenses ($10 million for EF infrastructure, the 5 bond issues approved by voters in 2015, etc.).
1D. However, the real way to address the gap between rising services cost and slower rising property tax revenue is to reduce the amount of development that has the largest service costs — residential development.
1E. The May 2012 “Cost of Community Services in Chapel Hill” study provides the backup for this position. See:
Probably more than you want to know. 🙂