Chatham budget proposal outlines needs, shortfalls and a tax rate increase

BY ZACHARY HORNER, News + Record Staff
Posted 5/13/19

PITTSBORO — A property tax rate increase is something almost no county, city or town manager wants, and many elected municipal officials don’t like them either.

But Chatham County Manager Dan LaMontagne’s proposed county budget for fiscal year 2019-2020 proposes one — a 6.67 percent jump, or 4.19 cents per $100 valuation, from 62.18 cents to 67 cents.

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Chatham budget proposal outlines needs, shortfalls and a tax rate increase

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PITTSBORO — A property tax rate increase is something almost no county, city or town manager wants, and many elected municipal officials don’t like them either.

But Chatham County Manager Dan LaMontagne’s proposed county budget for fiscal year 2019-2020 proposes one — a 6.67 percent jump, or 4.19 cents per $100 valuation, from 62.18 cents to 67 cents. That means owners of property valued at $100,000 would pay $670 instead of $621.80, in annual ad valorem taxes, a jump of $48.20. The owner of a $250,000 home would see an increase of about $120.

In a written statement about the budget, LaMontagne said that “absolutely no one wanted to end up recommending a property tax increase,” but “a perfect storm of new growth-related expenses hitting at the same time” necessitated the jump.

It marks the county’s first tax increase in three years.

While presenting the proposed budget to the Chatham County Board of Commissioners May 6, and in the budget package itself, LaMontagne outlined several needs the county’s current and projected funds couldn’t meet without an increase, and they span the county’s age groups, services and needs.

Why a rate increase?

Municpalities can control their property tax rates without a public vote, according to state law. Chatham County last upped its tax rate in 2016 from 62.19 cents to 63.38 cents. The rate dropped by 0.51 cents a year later.

In his budget message, LaMontagne wrote that planning for the next fiscal year was “a bit like navigating through the fog; eventually the fog will lift but, until it does, caution is necessary to ensure safety.” He wrote that economists are “uncertain” about how long the “second longest economic expansion since 1854” will slow down, or a recession will come. The budget proposal was written with that in mind, he said, with hopes that conservative estimation of revenues would “help ensure the county can weather an economic downturn.”

But a growing population, bad weather and other factors, LaMontagne wrote, have contributed to a need for more revenues.

“Another year of severe weather coupled with the passage of several bills currently under discussion in the General Assembly could impact our revenue at a time when we are faced with increased expense from capital projects, support for schools and state funding cuts to critically needed services,” he said. “The budget presented here is the result of all county departments working together toward the common goal of being wise stewards of public funds while continuing to provide needed services.”

Hurricanes Florence and Michael struck in the fall of 2018, and rain has continued to fall since then. According to the U.S. Geological Survey’s National Water Information System, Jordan Lake has seen nearly 40 inches of rain since Sept. 1, 2018, and as a result, LaMontagne wrote, revenues from permits and fees have fallen. Revenue from residential permits is projected to remain flat, and the building inspection fee estimate for this fiscal year is $1.3 million short of numbers for last year. Register of Deeds fees are also projected to be slightly lower than fiscal year 2018-2019.

Add that to major capital projects that need to get done — more on those below — and cuts from state and federal grants, and the funds had to be picked up somewhere else. There are many areas that have budgeted funding increases, but three are notable for the range of people they serve and amount of money requested — education, senior services and public safety.

Chatham County Schools

There are nearly 9,000 students in Chatham County’s public schools, and the district employs 1,654 people. It’s an entity that affects thousands of Chatham residents beyond those who step foot in a classroom, and the county’s view of the district’s importance can be seen in its share of the budget: just more than 35.8 percent of the General Fund, or $44,817,437.

The proposed budget fully funds the Chatham County Board of Education’s request of an additional $1.5 million. The funds are split into two categories: $715,000 for general allocation and $825,000 for the county’s teacher supplement. Schools officials have said the supplement is vital for retaining teachers, something Superintendent Derrick Jordan hinted at in a statement to the News + Record on the county budget.

“The current level of state and federal funding simply does not allow us to do all that we believe is necessary to ensure a well-rounded education for our students,” Jordan said. “That’s why we are so appreciative of the support we receive from our county leaders. They have consistently worked alongside us to fill gaps, like supplementing teacher salaries and not only making sure that our infrastructure meets our needs in terms of both quality and space but also that those school buildings are safe for everyone who enters.”

The budget also sets aside $1.4 million for opening Chatham Grove Elementary School in fall 2020. Add in the additional $1.5 million requested, and that accounts for 2.8 cents on the tax rate.

Also in the works is the start of construction on a new Central Services building for the district. The project will locate all of CCS’ administrative personnel in one location and accommodate any expansion. The current building on West Street in Pittsboro is “not big enough now,” district COO Chris Blice told the News + Record in January. The project is slated to cost $11,142,065 of addtional debt that will need to be paid off.

Education spending in general also includes $200,000 for the first year of the Chatham Promise, a program designed to give free Central Carolina Community College tuition to qualified graduates of Chatham County high schools (public, private and homeschooled), and $245,000 to open CCCC’s Health Sciences Facility in northern Chatham.

Public Safety

Chatham’s projected population growth has a lot of side effects, but something that might be missed is how public safety, including 9-1-1 communications and Emergency Management, has to respond. One response included in the budget proposal is a $10 million expansion of the county’s Emergency Operations Center.

“As the community has grown all emergency service disciplines must find ways to meet increased demand,” said Steve Newton, the county’s emergency management director. “In the case of the EOC expansion, we are in a position where there is no more capacity for growth as we prepare to meet that demand.”

There’s currently no room for expansion in the 9-1-1 Communications Center, Newton said, so new personnel have been placed in the EOC. But if those population estimates are met, they’re going to run out of space. Additionally, the center has “aging mechanical systems” and needs work to “meet modern grounding requirements and standards for public safety telecommunications systems,” Newton said.

Part of meeting standards for telecommunications systems will come with an $18,909,295 investment in a new radio system. Mike Reitz, Chatham’s emergency communications director, said the current 30-year-old system has “reached the end-of-life regarding hardware, infrastructure and overall design,” and the upgraded system will “ensure” public safety agencies' ability to communicate “effectively and reliably.”

Reitz also spoke about the necessity to upgrade to establish clean communications with areas surrounding Chatham, that the new system will be able to connect better with surrounding municipalities.

“We are currently on a VHF/UHF radio system and most others around us are on an 800 MHz system,” he said. “These are disparate radio systems. From daily operations to major incidents or events, our county experiences challenges communicating with surrounding counties.

Doing the radio system upgrade and EOC expansion simultaneously, LaMontagne wrote in his budget message, will “maximize the capacity for borrowing and…provide efficiency between the two related projects.”

Senior Services

Contributions to the Chatham Council on Aging only account for $1,300,506 of a nine-figure budget, but the county is upping its funding of senior services by 30 percent.

In his budget message, LaMontagne said the COA has received “two significant cuts in state funding” that require the county to step in, without which COA Director Dennis Streets said the agency would be “less able to help seniors remain safe at home, less able to support family caregivers and less able to offer opportunities for wellness and engagement.”

The county is providing an additional $177,140 for transportation services. The COA contracts with the nonprofit Chatham Transit to run eight routes bringing seniors to the Pittsboro and Siler City senior centers for lunch and activities Monday through Friday. Streets said the services has 89 total riders right now, 12 of them new since January. Chatham Transit will also bring seniors to medical appointments.

The COA has been getting federal funds to help pay for those services, but Streets said those grants will be cut “by more than half” starting July 1. He added that not getting those funds from the county would cut back on transportation and have a “ripple effect on other service needs.” For example, several riders are homebound and may not receive meals if they don’t get rides.

The budget proposal allocates $91,020 to in-home aide personal care services. The COA contracts with state-license home care agencies to help seniors that need assistance with “activities of daily living,” such as bathing, dressing, meal preparations and some light housekeeping. Streets said the program has been supported by the county and North Carolina’s Home and Community Care Block Grant, but funds from the block grant will “likely be cut by about $31,000 unless the General Assembly takes action to increase overall funding in North Carolina.” Chatham’s program, which also provides respite for caregivers, served 89 residents last year and has seven on a waitlist and another eight for caregiver respite.

LaMontagne said in the budget message that additional funds would also be used to provide a higher wage for aides “to address aide shortage.”

Finally, the county will contribute $30,362 for general purposes. Like the schools and emergency operations, senior services will soon begin to feel the effects of growth in Chatham. Almost a third of the county’s population is 60 and older, and according to the 2018-2023 Aging Plan, Chatham will be the 4th oldest county in the state in terms of proportion of older adults by 2030.

“The aging of Chatham’s population is clear and compelling,” LaMontagne wrote. “The County’s general allocation to the Council is vital to providing the required match for other public and private grants and gives the Council the flexibility to meet the growing needs of seniors and their families who view the Council as the primary source of access to information and service.”

Not a unique situation

Several of the county’s budget categories are seeing increases from last year: an 8 percent jump in administration, 7 percent in human services, 3 percent in public safety and 12 percent in culture/education/recreation. The budget also says debt expenditures are expected to jump 36 percent from fiscal year 2018-2019.

But Chatham is not alone among its neighbors in considering a tax rate increase. Wake County is debating a 6.36-cent increase, to go from 65.44 to 71.8 cents. In total, 76 percent of the increase will be directed toward education purposes.

Alamance County’s proposed budget for the next fiscal year has an 8-cent increase, with the rate jumping from 59 to 67 cents. Eighty-eight percent of that jump will go towards bonds and pay-as-you-go projects for the public school system and Alamance Community College.

Short-term, LaMontagne wrote in the budget message, growth in the county’s property tax base and local sales tax collections has been good, and there’s optimism that residential and commercial construction projects currently in the pipeline will “turn...around” the recent dip.

“We’re making wise investments in our schools, our capital projects and our employees to ensure that we are well-positioned for growth,” he wrote. “While our two new schools and new health sciences building at CCCC will help us deal with the expected growth, these investments are substantial and additional capital projects are on the horizon. We will have to be cautious about how we invest our resources to ensure our continued wise financial stewardship.”

The full budget proposal is available online at chathamnc.org/annualbudgets, and copies are also available at the three county library branches. The public can give its input on the budget at public hearings May 20 (6 p.m., Chatham County Historic Courthouse, Pittsboro) and May 21 (6 p.m., Siler City Town Hall Courtroom, Siler City), and the commissioners will hold work sessions May 23 and 30, if needed. The county’s goal is to have the budget finalized and approved on June 17.

Reporter Zachary Horner can be reached at zhorner@chathamnr.com or on Twitter at @ZachHornerCNR.


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