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We’re in the final month of the fiscal year, which means it is crunch time for local governments to finalize their budgets.
In some places, the process is relatively uneventful but in a purple county like New Hanover, it’s often a flashpoint for philosophical differences over government spending. This has generated some outsized rhetoric (and shaky math) on social media, but it’s not all light and no heat – there is a serious debate at hand about the role of local government. The budget is the most concrete expression of that debate, between fiscal conservatives who think their local government has grown too large and more liberal residents who believe our region’s affluence should translate into more government services.
New Hanover County commissioners are set to vote on a budget on Monday afternoon, so it’s a good opportunity to look back at the budget process — not the sexiest topic, I know, but one worth exploring — especially when it gets into the confounding weeds. I know the cliché is that folks don’t wanna know how the sausage is made, but I think they really do. At the least, I think it would be better if they did.
I know there’s some interest because I’ve heard some good questions over the last few weeks: How did a request for a tightened budget produce one with increased spending? Why have some news reports run with headlines and ledes about New Hanover County lowering taxes — despite the fact that property tax bills are almost guaranteed to go up this year? Commissioners pay the political price when residents are unhappy with budget priorities — but who actually shapes those decisions? Regardless of your political affiliation or fiscal temperament, I think it’s good to unpack stuff like that.
Sometimes a particular issue catches people’s attention, it’s true. Last year there was a high-profile debate over Port City United, New Hanover County’s ill-fated attempt to stand up a community safety department based on the Cure Violence Global model. This year, the City of Wilmington considered disbanding its horseback police unit, a downtown fixture about which some people had strong feelings (Councilman Luke Waddell posted on Facebook on Friday that, after much wrangling, funding for the unit had been preserved). Every year, education funding is a hot topic.
Overall, though, the budget remains a mystery to most folks. New Hanover County’s budget, if printed out, would be over a thousand pages, I’m told by staff. I’ve been following the process for months, and I could only probably name a few dozen items. Even elected officials — like our county commissioners — often have only a high-level understanding of the budget, and they spend hours in workshops preparing for each new fiscal year.
Over the last few years, this inability to really get down to what I’ll call the ‘granular’ level has been a bone of contention for the board’s more fiscally conservative commissioners, Republicans Dane Scalise and LeAnn Pierce, who have grown increasingly vocal about their desire to reduce county spending.
Last year, Scalise — along with Democratic Commissioner Rob Zapple — asked to go through ‘the binder,’ a thick printout of the line items that make up a proposed budget. But the binder’s hundreds of pages are essentially obscured in budget codes. This is, in part, because that’s how the county’s financial software works, and in part because the county hasn’t spent the money yet. For example, the budget might provide for the office supplies for a particular department or division — but it doesn’t include line items for a specific type of pen, stapler, or printer paper. One of the biggest expenses is personnel, but individual employees might leave for another job, retire, or get promoted — meaning a new hire for the existing position, someone who might get a slightly different salary based on their experience. Budgets are a best guess, but local government only really know exactly what they’ve spent (and on what) in retrospect.
This year, as the budget process kicked off, Scalise suggested an independent auditor might be able to go through the county’s finances and find potential savings (Pierce said she liked the idea but voiced concern that there wouldn’t be enough time for them to complete an assessment before the budget was put together). Next year, the idea might resurface but it would, as I understand it, be an extensive and expensive process. Auditing the county from stem to stern would almost definitely cost over a million dollars, and would likely disrupt county operations at least somewhat, as auditors worked to understand how each department worked — and how it might work more efficiently.
The county does have its own auditor, who I’ve been told does an excellent job ensuring departments are being accountable. It’s worth noting that the auditor is largely tasked with making sure the county’s finances are on the up and up, not with making staffing decisions (or deciding, for example. if the county should go with store-brand sparkling water instead of Perrier).
In general, fraud and financial mismanagement aren’t really the concerns I hear from fiscal conservatives, and I don’t think that’s what Scalise and Pierce are looking to root out. I think the issue is more fundamentally about what the government does and how it’s run — a belief that the government could both do more with less (that is, be more efficient) and also just do less (that is, pare back the county to its core services).
I hear it all the time from people (not just Republicans, but Libertarians, independents, even some Democrats), that the government is just too big, too bloated. But addressing that is complicated, I think in large part because of how the budget process works.
Take, for example, this current county budget. Many people have heard about the major moving pieces, but here’s a quick recap:
This year there was a revaluation, a countywide assessment of all properties (required every eight years, but performed by New Hanover County every four years to dampen the impact of appreciation).
The reval increased property values by roughly 67% on average. That means, without a change in the tax rate, your property tax bill could go up by the same percentage — a $1,000 annual bill would go up by $670. So, not reducing the tax rate is basically politically untenable. There would be riots (at least figuratively).
So, the county naturally decided to reduce the tax rate – which is why you’ll sometimes hear and see news reports about ‘lowering taxes.’ Unfortunately, those reports occasionally fail to add the crucial context: Because properties are worth more, lowering the tax rate doesn’t necessarily mean lower tax bills, and in fact, this year costs to property owners are definitely going up, with the debate being over by how much.
Notably, the media isn’t the only place you’ll hear misinformation about the tax rate versus the tax bill. In 2021, the county tried to frame its budget as a tax cut but, because the 2021 reval had increased property values, the actual tax payments for property owners went up. Residents either didn’t buy it, or caught on quickly, and — feeling a little gaslit — voiced their frustrations. The county was much more transparent this year that bills would likely increase, even if taxes were cut.
Ok, but how much should the county reduce the ad valorem tax rate from the current 45 cents on $100 of property value?
One option is ‘revenue neutral’ — a figure that state law requires the county to determine after every reval — which is the tax rate that would essentially mean people pay the same property tax bill that they did last year, prior to the reval. The county has put this figure at 29.2 cents (although some have argued it should be slightly higher). Earlier this year, Scalise told me while he felt this was an aspirational goal, he didn’t think true revenue neutral was politically viable.
Another option is what I’ve called an ‘adjusted revenue neutral’ figure, meaning you take revenue neutral and account for inflation. This is more or less what county staff considered when they put together a budget with a tax rate of around 35.5 cents, which accounted for roughly $68 million in additional funding based on inflation, cost of living, and other rising costs. Staff would eventually trim that down to 35 cents, which would mean about $40 more per month in property tax for the average home value, which is now around a staggering $580,000 in New Hanover County.
(And, of course, you could in theory cut below revenue neutral, shrinking the budget — but I don’t think that was ever seriously contemplated by county staff.)
So, with every cent worth about $8 million, commissioners were given some options for how to trim the budget. But they were mostly high-level decisions about funding programs or divisions; commissioner didn’t see line items but instead what amounted to bundles of funding in the hundreds of thousands or millions of dollars.
To get a sense of this, you can check out the county’s interactive budget tool. It’s a fun little experiment, but also a little frustrating if you’d hoped to get a granular view of where your money goes. For example, you can tweak the $21.4 culture and recreation budget, but only by adjusting funding levels for general options like ‘museum’ or ‘library.’ Likewise, in the general government category, you can increase or decrease the $17.6 million IT department funding — but you get no sense of what that $17.6 million represents.
There are obvious reasons for doing things this way. Recently, commissioners had a healthy debate for ten or so minutes about potentially adding a single new position. Imagine that, for two thousand employees, and thousands of minor purchases, pieces of equipment, and office supplies.
The current solution is delegation: much of what ends up in front of the commissioners comes up from staff through department heads, who are tasked by County Manager Chris Coudriet with determining what they need to run their departments. There have been times when commissioners have asked to tighten things up, but they communicate that to Coudriet, who in turn gets those other administrators to revise down their requests.
This isn’t to disparage staff, but commissioners are essentially asked to trust department heads to gauge their own efficiency. These are dedicated civil servants, who believe their work is important, and feel confident in asking for the resources they feel they need to get the county’s job done. I’m not suggesting they’re dishonest — but self-evaluation has its limits. Could the IT, engineering, or human services departments be leaner, could they deliver with less funding? Commissioners and department heads might not agree on that.
Coudriet has himself dedicated a quarter century to the budget process, and obviously believes in it — but commissioners often have to take his word for it.
What doesn’t happen, for example, is someone like Scalise or Pierce going through the organization chart and shaving one position off of every team, or doing a cost comparison on staplers, office chairs, and laptops. Both have argued that those smaller, line-item savings could add up to millions. But commissioners can’t really make granular decisions because they don’t have access to that level of information. Instead, they have something like that dashboard.
A conservative friend put it to me this way, “the best way to lose weight is to eat less and exercise more, but the county is telling commissioners, if you wanna cut fat, you need to cut off an arm or a leg.” It’s a bit of an exaggeration, I think, but it gets the point across.
For example, there was a list of cuts that could get the county to revenue neutral, but most were pretty broad. Items included nearly millions saved by not funding staff or books for the new Northchase or Project Grace libraries — a way of saying ‘Don’t open the long-promised and highly touted new libraries.’ Other cuts worth millions included cancelling raises for employees or sheriff’s deputies. As I understand it, these weren’t presented as the only path to hitting 29.2 cents, but they give you a sense of the type of options commissioners have been given.
Cuts this broad are almost guaranteed to be unpopular. And that almost feels like the point, as if staff were saying, ‘you wanna get nuts? Let’s get nuts!’
In fact, Republican Bill Rivenbark, the chair of the board of commissioners, has been using a version of this list to defend his decision not to push for the more significant budget reductions Scalise and Pierce wanted.
Much has been made, including by me, about Elon Musk and DOGE’s chaotic — and damaging — approach to cost-cutting. However, while dysfunctional and potentially unconstitutional, Musk’s work for the White House (which appears to be over) did reboot a public conversation about government efficiency that’s crossed party lines – although many, like Democratic Governor Josh Stein, have been quick to add that we need to use a “scalpel, not a chainsaw.”
But county commissioners don’t have a scalpel. And, if you think about it, that means the public doesn’t, either.
For fiscal hawks, the most frustrating incarnation of all this was the most recent turn in the budget process.
At the May 19 meeting, Coudriet presented his recommended budget, based on a 35-cent tax rate. Commissioner Zapple asked Coudriet to reduce the tax rate from 35 to 33.9 cents, acknowledging he was asking staff to “do the impossible.”
Doing a little back-of-the-napkin math, the cut would mean the average homeowner would pay between $32 or $33 more a month instead of $40 more a month. (It doesn’t quite feel right to say it ‘saves’ them money, but it cushions the increase a bit.)
While there wasn’t a formal vote, Zapple had the support of the majority, including fellow Democrat Stephanie Walker (who had hoped for a slightly higher tax rate, in large part to support education funding). He’s also found support — surprisingly, for many on the left and right alike — from Rivenbark, who doubled down on social media despite some scathing criticism from fellow Republicans.
Then, after the meeting, commissioners individually requested specific items to be added to the budget, according to Eric Credle, the county’s chief financial officer.
Thus, during this week’s agenda meeting, Coudriet previewed a new budget that actually included $3.5 million more than the previous budget.
To balance that increase with a 33.9-cent tax rate, staff proposed $8 million in short-term loans (that could, in theory, be paid off in a year) to cover capital outlay. Staff also suggested funding school nurses with over $4 million from the county’s Mental Health and Substance Use Disorder Fund (that’s $50 million set aside from the sale of New Hanover Regional Medical Center).
Scalise and Pierce were visibly irate, in particular at the idea of borrowing money to make ends meet. Scalise also noted, correctly, that while staff have in the past recommended using investment revenue from the mental health fund, they’ve discouraged tapping into the corpus.
In an email, Credle said, “the practice of borrowing for capital outlay is not staff’s preferred funding method,” but added it “is not an unreasonable budget measure.”
Now, from what I saw at the May 19 meeting, Zapple hadn’t actually asked Coudriet to cut $8 million from the budget, he’d just asked to cut the tax rate — leaving it up to staff to figure out how to make it work (no small task, as Zapple noted).
But, certainly, many watching the meeting would have expected that cutting taxes would mean cutting spending. This is, after all, the mathematical premise of the county’s interactive budget tool, where if you cut the tax rate without reducing spending you get a red bar and a warning: “You are in deficit.”
So, I don’t think you have to agree with Scalise and Pierce about where the tax rate should be to understand their frustration. Fiscal conservatives want less spending and less debt. Zapple’s request seemed like a move toward the middle on those fronts. But what came back from staff had more spending and more debt.
I'm not advocating for cutting the county budget (or any budget direction, for that matter). But you have to ask, for people who'd like to restrain or reduce government spending, what would that even look like?
I’ve talked a lot about fiscal conservatives in this edition, in large part because they’ve been the ones most vocally frustrated with this year’s budget and the budget process in general.
But it’s important to note that there are many others who are happy with the path the county is on, and therefore not terrifically interested in the budget process. They love that the county has invested in libraries, senior services, education, law enforcement, and parks. When I talk to people, I hear that, with the exception of the shiny new government center, most of the county’s investments have been broadly popular. And despite all these financial commitments, New Hanover County’s tax rate is reasonably low; as of last year, it was the 16th lowest in the state and below the average by about 17 cents. There are more people moving here every day, and they aren't leaving at the same rate, so it's highly plausible that the county is doing something right.
Commissioner Walker wrote in an opinion piece recently, “We have the capacity – and the responsibility – to balance tax relief with maintaining excellent services.”
While I don’t think anyone would say no to lowering taxes and keeping these services, I think there are plenty of people who agree with her that this year’s budget strikes an appropriate compromise.
And, I know there are some who would happily increase their tax rate — depending on where it would deliver resources. Some of the most vocal advocates for increasing spending want it to go toward education, which means by and large decisions made by the school board and the district’s administration. That has its issues, for sure, but it’s not quite the same situation we’ve been examining, where commissioners are at times in the dark about their own budget.
In other words, while cutting the budget is hard for commissioners, increasing education spending would be procedurally easy (though politically not so much).
All this said, I do think the budget process leaves a bit to be desired for a lot of people, not just conservatives.
There are certainly granular budget priorities in education, public health, public safety, and recreation that don’t go in front of the commissioners. And, more to the point, if Scalise and Pierce are right, and there are millions in savings waiting to be found, there are undoubtedly those who would like to see that money reinvested elsewhere instead of showing up as a tax cut. There are those who would like to see fewer deputies and more teachers and others who much rather staff up the detention center than the county’s communications and outreach team. You get the idea.
But commissioners don’t make those granular decisions. They set policy, and Coudriet executes it as county manager.
And even policy, as expressed in the budget, often flows through Coudriet as a filter — he takes the disparate preferences of five different commissioners, who represent different segments of the community, and tries to unify or at least aggregate them. He cannot be all things to all people, but it is his very difficult job to try.
I have many times heard Coudriet remark that he serves with pleasure and at the pleasure of the board — and that’s been true since 2012, when he was appointed as county manager. But to a certain extent, his role rivals or exceeds any individual commissioner. Scalise, Zapple, and Pierce have all been outspoken on particular policy points, but Coudriet writes the budget. And when commissioners want that budget adjusted, Coudriet gets it done. It’s no wonder I’ve occasionally heard him referred to as the ‘sixth commissioner,’ or even the ‘supercommissioner.’
I’m not saying Coudriet has usurped the county government. If commissioners told Coudriet to set the tax rate at 29.2 cents, or double teachers’ raises, or slash the sheriff’s budget, I believe he would do it with aplomb. But in the absence of consensus and specificity, a lot of decisions fall to him.
If the budget is sausage, Coudriet is the one making it. Commissioners can suggest certain seasonings. They could ask for a leaner cut — but even that, they might not get.
This is the process we have, and perhaps the homogenized result is the most appealing — or the least objectionable — to the most people. But, still, it’s a sausage factory. And it cranks out a little more every year.
[Editor’s note: Commissioner Rob Zapple is a member of WHQR’s Board of Directors, which has no role in editorial decisions or news coverage.]
