Carrboro discusses budgeting in chaotic times

GOVERNMENT

CARRBORO–Property taxes on a $200,000 Carrboro home would rise next fiscal year from $936 to $1,130 under the town’s proposed budget, despite the declining property tax rate.

During the May 6 budget presentation, Finance Director Chaz Offenburg said cutting the rate from the current 0.6044 to 0.4681 for Fiscal Year (FY) 2026 would be “revenue neutral”–i.e., not increasing property tax revenue. The proposed tax rate of 0.5653 in the budget would increase revenue. That’s due to Orange County’s latest property revaluation, which saw property values up an average of 52% county-wide since the last revaluation in 2021.

Last month, the council discussed the challenges of budgeting when the state of federal funding and the economy are so unpredictable. The town will hold a public hearing on the budget later this month, with a second hearing and a final vote in June. FY 2026 starts July 1.

The financial picture

Offenburg said the town’s staff developed the budget based on the town government’s priorities:

The quality of life in Carrboro.
The reality of the current economic landscape.
The balance between long-term and current needs.
Fiscal responsibility.
Carrboro’s commitment to racial equity and sustainability.

The projected expenditures for FY 2026 total $62.5 million, down from $68.3 million. Offenburg said that’s because there’s less grant money available, and the city has used up most of the money it received under the American Rescue Plan Act (ARPA). Expenditures include $11.8 million for operations, $1.5 million for debt service, and $20.7 million for personnel. The staff budget includes increases for salary, health insurance, and retirement plan costs, but no new hires.

Council Member Catherine Fray said Carrboro had to pay more to keep staff from jumping ship: “Chapel Hill was starting to poach staff from us” by offering higher pay without needing Carrboro employees to move.

The city’s fund balance includes: $36.6 million in the general fund; $22.2 million in the capital projects fund; $1.8 million in special revenue, such as grants; $1.6 million in the stormwater management fund; and $132,500 in parking. Roughly 53% of Carrboro’s revenue comes from property taxes, 20% from sales tax, and 5.3% from licenses and fees. The city anticipates $0 in parking revenue — Carrboro has postponed proposals to charge for public parking — and the budget assumes sales tax will remain flat.

Plugging gaps

One of the questions generating the most discussion was whether to budget for designing a controversial greenway along Bolin Creek (see accompanying story). Another was whether the town has been spending too much of the general fund on recurring expenses that will have to be paid year after year. The general fund is the pool of money not assigned to specific purposes, such as capital projects; this gives the town more flexibility.

“For two years we really didn’t address the revenue side of some of our decisions,” said Toney, tapping the general fund instead. Presently, the budget draws from the fund again for 2026 as an alternative to raising the property tax rate. “I wouldn’t recommend (after this fiscal year) dipping in again.”

Fray said the budget hits the sweet spot for a “comfortable and not luxurious fund balance.” While having a large enough balance for emergencies and unforeseen expenses is essential, a too-large general fund means residents pay taxes and do not see any spending that benefits the community.

You can stream the council meeting on YouTube. Carrboro will hold a public hearing May 20, then a potentially final hearing June 3 to adopt the budget. If the council requests changes the final vote can be pushed back to June 17.

Fraser Sherman has worked for newspapers, including the Destin Log, the Pensacola News-Journal and the Raleigh Public Record. Born in England, he’d still live in Florida if he hadn’t met the perfect woman and moved to Durham to marry her. He’s the author of several film reference books and has published one novel and several short story collections. This reporter can be reached at: Information@TheLocal Reporter.press