New Hanover Tax Hike

New Hanover County residents already approved a one-quarter cent sales tax increase. Now the county commissioners plan to raise property taxes too.

At the direction of the majority of commissioners, County Manager Bruce Shell will produce a recommended spending plan that uses the extra sales tax and a 1.3-cent property tax rate increase to balance the budget. That document will be presented to the commissioners on May 17.

The preliminary budget plan does not impose drastic cuts to "quality of life" programs such as libraries, parks and others. The commissioners had said that those programs could be spared if the voters approved the extra sales tax, which they did in Tuesday's primary election.

A 1.3-cent tax rate increase would bring the rate to 46.55 cents, which would add an additional $32.50 to the county tax bill for a homeowner with a $250,000 house, or up to $1,163.75 annually. The 1.3-cent increase will produce roughly $4.3 million in revenue next year.

Commissioners Jason Thompson, Jonathan Barfield Jr. and Bobby Greer said they would accept the property tax increase to pay for voter-approved debt for parks, schools and the community college. Some of the tax increase will also be used to reduce the number of unpaid furloughs taken by county employees.

"We can only put the shortfall on the back of our 1,500 people for so long," Thompson said.

The sales tax will raise about $4.1 million in revenue in the first year, and $7 million thereafter. It will cost shoppers 25 cents on a $100 purchase, and won't be charged on groceries, prescription drugs, utilities, gas and car purchases.

Commissioners Ted Davis Jr. and Bill Caster refused to go along with the property tax increase because it would put more on the backs of taxpayers with fixed incomes.

The commissioners had been facing a budget deficit as high as $13 million brought on by a decline in revenue from the struggling economy, increasing debt payments for voter-approved bonds and other factors.

County employees will likely get some money back by having fewer unpaid furloughs in the next budget year, which runs from July through June 2011. The proposal presented Thursday would have reduced the number of furlough days from 10 to 3 days. That would cut employee salaries by about 1.15 percent, instead of the 3.85 percent salary cut they have this year.

Thursday's meeting, the commissioners' last budget workshop before getting the recommended budget, involved lots of political gamesmanship, with commissioners trying to pin each other down on the tax increase question.

Shell originally presented a 1.6-cent property tax rate increase to the board, but because Davis and Caster wouldn't go along, Thompson said he wouldn't go along either and asked them what they would cut.

Davis floated the idea of adding some employee furlough days back in, while Caster suggested using the fund balance. Shell strongly cautioned the commissioners against using more of the fund balance, since the county recently achieved a triple-A bond rating, and using fund balance could put that in jeopardy. That could cost the county millions over the long term because of higher debt costs, Shell said.

The budget plan keeps the funding level for the New Hanover County Schools, Cape Fear Community College and a plethora of outside agencies at the same level as the current budget.

source: StarNewsOnline

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