Two amendments passed by state lawmakers have counties concerned over future budgets and the impact it could have on services.
On the November ballot, voters will have two questions to answer regarding income tax caps and placing a limit on property taxes. WRAL News has reported extensively on this over the last two days, but essentially, voters will decide if the income tax should be capped at 3.5% , instead of the 7% it is currently and, if municipalities should be limited in how much they raise property taxes in a given year.
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It’s the latter that’s of major concern to county commissioners like Don Mial of Wake County.
“You know, 75% of our revenue comes through our property taxes,” Mial said. “So anything there could have a profound effect on us.”
Mial’s keeping his eye on the decision by the Legislature because right now, it’s unknown what that property tax limit could be. Lawmakers indicated they needed to wait until after the amendment was passed before coming up with specifics.
But Mial says the county is having to take another hard look at its budget about where to cut back in anticipation of what could come.
“We are doing everything we can,” Mial said. “We had to pull $35 million from our fund balance. And when you start talking about providing services to the people in Wake County, there are so many things that go into what we do.”
Things like the library, Health & Human Services, schools, EMS and law enforcement are a few examples of where Mial says they may need to cut back.
“If there was a way to cut, we would look at it,” Mial said. “And we have looked at it but it’s just not there.”
Since 2020, Wake County’s revenue has increased by 37% , or roughly $750 million. It’s due in large part to the increase in population, according to Mial. He says about 24,000 people move here every year, or the equivalent to Wendell’s population. So while revenue is up, so are costs.
“When it grows, even though you may be taking in more, it requires more resources in order to meet those needs,” Mial said.
And while the budgets plan to add money to their reserves every year, the reality is, the county isn’t adding much.
The most recent budget data shows, planned additions to the reserves of $30 million, $13.7 million, $2.4 million and $2.8 million in each year from 2020 to 2023. It ended up adding $14,541 total for all four fiscal years.
“I’d love to say, 'Yeah, we just got that secret tree or that pot of money,'” Mial said. “'We just pull it out and use it whenever,' but no.”
Republican leaders who pushed this amendment believe these budgets were unfair to residents.
“We’ve heard from residents who reached out because their property taxes doubled or tripled,” Rep. Brian Echevarria, R-Cabarrus, said. “When they talk about stable revenue for local governments, they ignore that homeowners need stability and affordability.”
“You can not keep dumping this kind of burden on citizens year after year,” Rep. John Blust, R-Guilford, said. “We talk about the struggle of Commissioners and Town Councilmen, what about the struggle of average working people? They don’t have a source of income that they can raise every year. They’re struggling just to pay their bills.”
State Treasurer Brad Briner says the possible limits on income tax and property taxes would not have a substantial negative impact.
“This state is extremely well managed financially,” Briner said. “We do have those concerns, but we’re going to continue to study it an devaluate it and make sure that we’ve dotted every i and crossed every t.”
But it’s much more than a right and left argument.
“We’re not red or blue,” Kevin Leonard, executive director of the North Carolina Association of County Commissioners, said. “We’re county green because we represent everybody.”
At the NCACC, who represent all 100 county boards, Leonard says they had concerns and opposition leading up to Wednesday’s votes.
“A levy limit in the Constitution, we didn’t feel was the right fix to helping people who are struggling to pay their higher property taxes,” Leonard said. “If they were attempting to do that, we suggested that they focus on passing laws that would enhance something called homestead exemption or the circuit breaker program. Those are programs the state set up to help people who have challenges paying property taxes.”
The concern now is how counties are going to pay for things the state mandates it has to pay for.
“We’re just trying to raise the point that 70% to 75% of every county budget is a mandated service for the state or federal government,” Leonard said. “So if the state, on one hand, is saying you’ve got to do these things, but then on the other hand saying, well, we’re only going to give you the ability to raise limited resources to do it, that puts a great amount of tension in the ability to provide services.”
And Raleigh Mayor Janet Cowell says, it may come out in more regressive way through fees.
“Instead of having just a waste and a water fee where it’s about usage, or a storm water fee or a garbage fee, which are kind of flat,” Cowell said. “You might move to a fee for police or a fee for fire. I know nobody likes property taxes but they’re graduated. People who are wealthy and have big homes pay more than people who have small homes that are worth less. But if you move to a bunch of fees, they’re flat and they tend to be a little more regressive.”
Cowell didn’t say she’s considering fees like this at this point. She is waiting to learn more about what this property tax limit looks like.
“Let’s take one step in front of the other and not rush to conclusions,” Cowell said. “We’re not out there raising taxes dramatically. I think the City of Raleigh has been diligent. It’s a very solid city and we will assess circumstances as they evolved. But I do think there could be consequences here.”
