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Chapel Hill Community,
Last week, Town Council had our first look at the Town Manager’s Recommended Budget and Proposed Tax Rate for Fiscal Year 2025–26. Now that we have real numbers to consider, we want to hear your thoughts as the Mayor and Town Council prepare to adopt a final budget and tax rate in June.
As I have shared previously, the Town faces many challenges in the coming year (or more) due to changes in federal, state, and sales tax funding combined with rising costs and an uncertain economy. Adding to that complexity, the revaluation has thrown us a curveball, with residential property owners now bearing more of the town’s tax burden (I’ll explain more below).
In considering this proposal, we know that many in our community face challenges too.
Key Points from the Manager’s Recommended Budget
The manager’s recommended total budget is nearly $164 million across all Town funds, which represents a 4% increase from the FY 2025 budget. This recommended budget includes an overall 13.1% property tax increase, adding 5.8 cents to the revenue-neutral tax rate of 44.2 cents per $100 of assessed property value.
As proposed, this budget maintains services at current levels and helps us continue progress on our five-year budget plan and strategic goals for Affordable Housing, Climate Action, Parks, and Everywhere-to-Everywhere greenways. Key new expenditures include:
- $1.5 million in funding for overdue facility, fleet, and equipment maintenance items.
- A 5% pay increase for our employees, to complete a multi-year plan to make town pay scales competitive.
- Our mandatory operating costs such as increased utility bills, our enterprise technology, tax collection fees and election fees, our Rogers Road commitment, and our Police Department operations.
- $1.2 million to cover Increased costs of doing business across the organization.
- 3 cents for transit (which is proportionally matched by our partners UNC Chapel Hill and Carrboro) for pay and capital expenses.
How the New Revaluation and Proposed Tax Rate May Affect You
Because the county’s revaluation increased the value of residential properties more than commercial properties, the property tax burden of this budget will shift more to homeowners in Chapel Hill. This means the average residential tax bill will increase 14.5% with a “revenue-neutral” 44.2 cent tax rate, purely because of revaluation. At the manager’s proposed 50.0 cent tax rate, there would be a combined tax increase of 29.6% for the average homeowner.
Some residential property owners will see higher increases, some lower. You can calculate the impacts on your tax bill by taking your new 2025 tax valuation and following the instructions here, using 0.442 for the “tax neutral” rate, and 0.50 for the manager’s proposed rate.
Commercial property owners, who experienced higher valuations last time, will likely see more moderate tax increases, if any at all in some cases.
Weighing in
As we grapple with a changed property tax structure and uncertain federal funding, we face difficult choices and we want to hear your thoughts and questions about what is being proposed and what you’d like to see.
You can weigh in by attending and speaking at the May 21st Budget Public Hearing (Town Hall, 6 p.m.) or by e-mailing us at mayorandcouncil@townofchapelhill.org.
Sincerely,
Mayor Jess
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