Property Tax Rate Increase Proposed for Dare County

A proposed 4-cent increase in Dare County’s property tax rate is necessary to catch up with long unmet needs, county officials say, but the fiscal year 2018 budget proposal also reflects how well the county has recovered from the recession.

“From 2007-2008, we have run as frugal as we can run a budget,” said Dare County Manager Bobby Outten in an interview. “We have improved our fund balance to recommended levels. So now we’re at the point where those things can’t wait any more.”

Outten presented his proposed spending plan at Monday’s meeting of the Dare County Board of Commissioners.

Most of the increase in the $158 million budget request covers $1.7 million for bringing county employees salaries up to current market standards and  $1.6 million to upgrade woefully outdated needs for Emergency Medical Services.

Outten said the EMS staffing and vehicle levels are the same as they were in 1997, yet over that same time frame, the call volume has jumped 81 percent. He also said that a county salary study was last conducted in 2005. In addition, the budget is addressing numerous deferred vehicle costs and building maintenance needs.

EMS increases will be done over five years, he said, and the county salary increases will be handled in a two-year plan. 

“We’re still operating frugally,” Outten added. “We just can’t postpone paying for those things in this budget any longer.”

Other expenses reflected in the budget proposal: the Board of Education school funding formula, based on a projection of 100 new students, as well as projected teacher pay increases of 5 percent, requires an additional $678,653; maintenance of Hatteras Inlet, $236,082; merit pay for county employees, $391,440; mandated increase in retiree supplemental health costs, $164,552; and operating costs for the new regional 911 communications center, $372,549.

If the FY 2018 spending plan is approved, the property tax rate would increase from 43 cents per $100 of valuation to 47 cents – the first tax increase since 2011. For a $250,000 house, that translates to $100 more a year.

Statewide, Dare County ranks as the seventh lowest property tax rate. North Carolina has an average rate of 66.3 cents.

Currently, the county’s taxable property value is about $13.2 billion, an increase in the tax base of $155 million over the prior year.

In context of the devastating financial crash in 2007 and the state’s slow economic recovery, Finance Director Dave Clawson said, the county is in pretty good shape. For instance, he said, in 2016, the sales tax revenue exceeded what it was in 2007 for the first time since the recession. And the county credit rating was just upgraded from AA to AA+ by independent financial agency Standard & Poors. 

Clawson said that the county’s fund balance is projected to be back to 20.8 percent, which falls within the county’s fiscal policy of having a fund balance (that is, assets minus liabilities) ranging from 19 percent to 21 percent. “During the recession, we got down to 13.5 percent,” he said. 

Revenue has bounced back – although no one expects it to ever return to pre-2007 days – but while the county continues to catch up, funds will still be juggled in the next budget cycle.

“It’s just a little bit more than they need to balance ’18 and it’s just a little less than they need to balance ’19,” Clawson said.

But the finance director emphasized there is no plan to raise taxes in those years.  “We’ll add to the fund balance in ’18 and use some of it in ’19,” he explained.

And just around the corner, Dare County will start peeling off big chunks of debt from past infrastructure projects, including construction of school buildings. In 2020, the county debt obligation decreases by $400,000; in 2021, it shaves off another $400,000 in debt; and in 2022, another $600,000.

“Other than beach nourishment, there’s no new debt in the capital improvement plans,” Clawson said.

Although no big projects are on the horizon, property revaluations will be conducted again in 2020. Depending on how much, if at all, the county tax office adjusts the value of property – that is, the tax base – it could mean a whole new ballgame.

Clawson declined to comment on the potential impact of revaluation on future county budgets.

A public hearing on the 2018-2019 proposed budget will be held on June 19 at 5:30 p.m. at the Dare County Administration building in Manteo.