Our new budget took effect today. And yes it included a 9% property tax increase and 4% utility increase. Let’s just get that out of the way.
Property tax works like this. Our new rate is 23.5 cents. Which means 23.5 cents per $100 value of your home. (Home value is determined by the New Hanover County Tax Department.)
For instance, my house is valued at $370,100. Therefore my tax is computed like this:
($370,100 / 100) = $3,710 x .235 = $870
That’s my share. $870. I suspect that I pay a little less than average, but it’s hard to say. What you pay is based on your home value. I live in a single family home, in a nice neighborhood (Carolina Sands), but it’s pretty small … only 1,600 sf. The Hoffer home is valued higher than most condos, but lower than most houses. Anyway…
The Tax Increase
I get no joy out of raising your taxes. The easy explanation is that every expense that our town government incurs has gone up in the last few years. So just like your household, it costs us more to do the same stuff.
That being said, someone has to hold the line and I was hoping that we could as well. The last couple of years we were able to because sales tax, ABC (liquor sales) and ROT (room occupancy tax) revenues kept rising. But they’ve started to flatten out, so here we are.
What a lot of people don’t realize about the budget is that 95% of it is consistent with the year before. It goes toward the stuff we always do: police, fire, road maintenance, parks, etc… Then maybe 5% goes toward the new stuff, the fun projects if you will: a sidewalk, skate park, new bath house, marina improvement, etc… So when the budget gets tight, those are the first things to go.
We’ve been improving our town lately, and I for one didn’t want to slow the momentum.
** The following image shows haw my taxes have increased through the years. If they would have increased at 3% every year since 2004, they’d be a little lower than they are today.
What About Finding Efficiencies?
It’s often assumed that if we just looked hard enough we could find millions of dollars worth of waste. That if we just hired a good accountant we could cut our budget in half. As if we’re heating town hall in the winter by burning $100 bills. That’s just not the case.
Someone once told me that “local government is the lean, mean, fighting machine of all governments.” And in comparison to county, state, federal and school districts, he was right. We’re not perfect (no organization is) but remember… there is no money in this budget for Ukraine, Israel or NATO. We’re not funding a grocery store (like New Hanover County) or buying $750 bolts for jet fighters.
The budget is just full of things that we hope will make our town better. Feel free to dispute some items, I won’t blame you. Go here to view the budget:
https://www.carolinabeach.org/government/departments/finance/annual-budgets
My Philosophy
I don’t look at it as if we’re operating a business. I look at it as if we’re managing a big family. There are some things we have to do, and some things we want to do. But we all must pitch in for everything. With that in mind, I look at every expenditure based on what your contribution will be. Should we build that sidewalk? … or reduce taxes accordingly?
Hence, the chart you see below. That sidewalk on Ocean Blvd? My contribution is $47. I’ll pay it. Police and Fire Department … $231. I’ll pay it. And so on. I’ll never ask you to pay for anything that I wouldn’t willingly pay for myself.
** The following image shows your contribution to some recent projects depending on the value of your home. For instance, if your home is valued at $500,000 you pitched in $28 for the skatepark.
Some Examples
Of course, one person’s wasteful spending is another person’s worthy project. Let’s start with the famous choo choo train that people love to use as an example of poor fiscal management.
First of all, it was funded by Room Occupancy Taxes, so it didn’t technically come from our local taxpayers. Regardless, it was a Parks & Rec purchase. And Parks & Rec departments have a unique mission … entertain the kids. You could dig through their receipts and find out that they bought oven mitts, ping pong balls, fishing poles, etc… Is that all wasteful?
Our staff thought a cute little train would be fun for some events. So they bought one for $3,000. My share of $3,000 is 35 cents! (I can handle that. Look at the chart to see what your contribution was.)
How about the Goosemaster guy at the lake shooing away the massive flock of geese that poop everywhere. Some people would say, “There’s a local government being proactive, creative and trying to solve the root cause of a problem.” Others would say “what a waste!”
I don’t love spending the money, but I see it as a local government trying a thing. If it doesn’t work (and it may not) we can always stop. At least we tried. It may cost up to $11,000 a year for the service. My share of $11,000 is $1.29. I can afford that.
There are some projects that I don’t see the value in. Painting a centennial logo on the water tower… not worth it to me. Investing money in the old library building … I’m not convinced that the building is worth it. Paving the Tennessee beach access… maybe. Small contributions add up… I get that.
But here’s the way local government works… Council sets general goals and priorities, staff decides what specific projects to take on. I have faith in the team, so I don’t raise a stink.
The Fund Balance
Our General Fund budget is $22 million and we have almost $11 million in the bank. Approaching a 50% fund balance is a great place to be. We could have dipped into it to keep the tax increase down, but it’s not worth it. If there’s a major emergency we’ll be glad to have the money (of course), but it helps in other ways. A strong financial footing allows us to get better terms for borrowing money… and we’ll be doing that soon for our major infrastructure projects starting next year.
It also gives us the flexibility to seize opportunities without sacrificing our current goals. For instance, when the Ocean Blvd sidewalk project got complicated due to stormwater concerns, we had money in the bank to keep the project alive.
[To recap: we received $485,000 from the state legislature to build the sidewalk. Awesome! But unfortunately stormwater complications forced us to add $400,000 of our own money. That sucked, but at least we’re still getting an important improvement, and at half the cost. Without a healthy fund balance, this doesn’t get done.]
Speaking of other opportunities…
South Lake Park Sidewalks
After years of trying, we’re in a contract with the NCDOT to build a sidewalk on S Lake Park from CB Lake to Carolina Sands Drive. We have to pay $550,000, DOT pays $190,000 and does all of the engineering and project management. If that sounds expensive, that’s because it is. Safety costs money.
We don’t have to stroke a check today, but we do have to formally set the money aside. Without a healthy fund balance, this doesn’t get done.
The sidewalk will start at the path around CB Lake and run along the west side of Lake Park Blvd, in front of the Veggie Wagon, Butts n Such, Scotchman and the Spot. Every street crossing will be ADA compliant and there will be a crosswalk at Spartanburg Avenue.
I should also point out that Council asked staff to work with DOT to keep the sidewalk going to Tennessee Avenue. This would allow Wilmington Beach residents safer pedestrian access to downtown. I don’t know what that extra block would cost, but I do know this… if we’re on solid financial ground we can make it work.
In Closing
We can’t be doing too bad. Here’s a comparison of two houses on Alabama Avenue. Same size, same distance from the beach. One in Carolina Beach, one in Kure Beach. The Kure Beach house pays $200 more in property tax. Winning!
Good explainer. Thanks Mike.