On Wednesday, staff told county commissioners that they were presenting a balanced budget, closing the roughly $4-million gap from the last budget meeting.
“Let that be the headline that we do have a balanced budget today,” budget officer Amanda Kostusiak told commissioners.
There are still some unfunded programs and unmet asks and, as a whole, commissioners seem amenable to working on getting some of those into the budget, in particular pre-K. However, there remains some daylight between commissioners on how to make up that funding, with the main options being to tap the county’s revenue stabilization fund (a $300 million fund from the sale of the hospital), raise taxes, cut other programs, or try to push to the limit of the county’s general fund balance (basically, its rainy day fund).
An added consideration that has shifted how some commissioners are approaching the budget is the likelihood that a $320 million school bond will pass this November, meaning the county needs to keep a close eye on its financial health this year as it seeks the best interest-rate deal on that debt.
Republican Chairwoman LeAnn Pierce said that made this year “unique,” adding that she predicted there would be “robust discussion” about it.
Revenue highlights
County staff’s preliminary budget includes roughly $469 million, up 2.1% from last year. That’s based on a predicted 2% growth in property and sales tax. Last year, property taxes brought in roughly a quarter of a billion dollars; sales tax brought in around $117 million.
Chief Financial Officer Eric Credle said the most recent sales tax was “unfavorable,” noting that two months in a row had come in under budget; Kostusiak did note that January is always a low month.
Pierce noted that national trends meant the county should tread carefully with the sales tax revenue.
“People are silently saying, recession, recession, and that's scary when you use those projections from your sales tax, and you continually start to see them come in under budget, so that that gap has to be met somewhere as well,” Pierce said, adding, “not to sound the fire alarm.”
Another revenue hit is $1.4 million in state social services reimbursements. That appears to be the result of a policy shift that was part of President Donald Trump’s “One Big Beautiful Bill Act,” which shifted some administrative costs to local government, including for SNAP.
Staff recommended against using the general fund, which commissioners tapped for just over $8 million last year to help keep the tax rate down. County Manager Chris Coudriet said that the county is “very much at that bottom floor,” based on the county’s own policy, which requires keeping a certain percentage (equal to about two months' operating costs) on hand.
Instead, staff recommend that between $4 and $6 million from the county’s Revenue Stabilization Fund be used instead. The $300 million fund was set aside after the county sold New Hanover County Regional Medical Center to Novant Health; it was earmarked for responding to natural disasters, mitigating economic downturns, and minimizing tax and fee increases.
Staff have consistently recommended using interest from the fund as part of past budgets, which doesn’t require, but tapping the actual principal requires a supermajority vote — at least four of five commissioners — to access it. According to Coudriet, it currently has $292 million available.
While no decisions were finalized on Wednesday, commissioners are not in total agreement about using the stabilization fund.
Expenses
Personnel: Staff noted that soaring healthcare costs are hitting the county’s personnel budget. The county is trying to adapt by leveraging its pharmacy benefit manager to collectively negotiate pharmacy costs for their employees.
The county is also looking at 3-4% market and merit-based increases for employees, and a targeted program to recruit and retain fire department staff, mirroring a program at the Sheriff’s Office.
Salaries and benefits, which make up about $212 million dollars of the preliminary budget, have increased by 4.8% since last year.
Education: Staff’s preliminary budget includes about $478.6 million in expenditures.
As always, education spending was a top priority. The preliminary budget includes a total of $141.7 million for New Hanover County Schools, with $109.6 million going to operating, pre-K, and capital needs. The county also includes support for nurses, mental health counselors, and school debt (which is over $15 million this year) in its calculations.
In past years, commissioners, including Democrat Rob Zapple, have noted that the county’s calculation of ‘average daily membership’ funding – or dollars per student – has failed to include a full picture of the county’s support. This year, the county provided two figures: an ADM based on the state standard of operating support and an adjusted figure that included all support. The preliminary budget shows the base ADM going from $3,872 to $4,088; the more inclusive version is going from $5,330 to $5,478.
Coudriet noted this was short of NHCS’s expected ask, which hasn’t officially been delivered yet. The county expected there to be about $836,000 in requests from NHCS that aren’t covered in the preliminary budget.
The county is meeting NHCS’s capital funding, increased by roughly $240,000 from last year to $2.8 million this year. It’s also meeting Cape Fear Community College’s capital request, increasing $524,000 from last year to $2.6 million this year.
Community Justice Center: Commissioners spent a fair amount of time discussing a $427,882 line item to support prosecutors and legal assistants working with the Community Justice Center, founded by then-District Attorney Ben David with roughly $5 million in grant funding from The Endowment.
However, The Endowment’s funding expires at the end of the calendar year, which is halfway through the fiscal year for most governments (including state and local funding for the DA’s office). County staff proposed funding the additional half-year from January through June.
It remains unclear if The Endowment will re-fund the CJC. While Coudriet said he didn’t know the specifics, he said, “my understanding is The Endowment has communicated it will not continue funding after this year. It was assumed to be a three-year grant, and that the grant expires at the end of the year.” David declined to comment on the record. Sources familiar with the situation say the CJC remains optimistic it will get Endowment funding.
The Endowment has a rolling grant timeline, so it could, in theory, provide the funding at any time, but a spokesperson said they would not “discuss potential funding decisions, discussions with current or prospective grantees, or any future plans pertaining to such matters.”
Several commissioners, including Democrat Stephanie Walker, sought clarity on the implications of this, and after a back-and-forth, Coudriet confirmed it could become an $800,000 budget item next year if The Endowment does not step back in. Pierce and Scalise both noted that a common issue with starting full-time positions with temporary funding is that the county gets stuck with the funding long-term, and if there isn’t funding available, they’re sometimes forced to make cuts.
Zapple praised the CJC’s work, but voiced some frustration with the situation.
“It was The Endowment that led us into it, for all the right reasons, but having them step out essentially makes this an unfunded mandate to us as the county. I wish The Endowment would at least sit down and talk about continuing what is clearly a benefit to our community. They've got the dough. They just, you know, frankly, they need to step up as well,” he said.
WAVE, YMCA, and economic development: The preliminary budget includes $488,000 in additional funding for WAVE, bringing the county’s total funding to $1.8 million. According to Coudriet, that’s to help the public transportation authority keep buses running on time on notoriously traffic-plagued routes like College Road.
It also includes $300,000 for the expansion of the Midtown YMCA, the first year of a five-year upgrade.
The county also continues to fund economic development nonprofits, with top support going to the Wilmington Business Development ($367,842), Greater Wilmington Chamber of Commerce ($210,000), the Wilmington Regional Film Commission ($168,446), the Film Partnership of NC ($100,000), and Wilmington Downtown, Inc. ($70,762).
Enhancements
The preliminary budget also includes roughly $1.3 million in ‘enhancements’ or department-level upgrades in the general fund budget. Those include an elections specialist position, a contamination study of Page’s Creek, upgrades to the 911 center, and a veteran treatment court coordinator.
Around $900,000 in enhancements are recommended for the New Hanover County Sheriff’s Office to provide a deputy for security at county facilities, a K9 deputy, a CSI detective, and several equipment upgrades.
Parks and Gardens has around $140,000 in recommended enhancements, including a master plan update.
The new Cape Fear Museum is also slated to get $73,816 for an educator, although that’s expected to increase the Museum’s revenue from additional programming by around $200,000 (for a net gain of $127,000, according to staff).
There are also several enhancements for the fire, stormwater, and recycling and solid waste – but those are paid from with independent funds, not the county’s general fund.
Not included
Several items raised by commissioners and others in meetings were discussed, but are not currently included in the preliminary budget.
That includes the $836,321 in additional operational support for NHCS, and restoring $916,500 in pre-K funding that was controversially cut last year.
The county had used Covid-relief funding to expand its support from six to twelve classrooms. But when that funding sunset, the Republican majority included it in cuts as part of their effort to keep effective tax increases lower after the county’s recent property revaluation, which increased property values (and thus tax liability) for many residents. The school district then scrambled to find funding to support classrooms where families already hoped to have a spot.
Zapple and Walker had both expressed interest in restoring that funding. On Wednesday, Republican Dane Scalise told Walker he thought that was doable.
“I think that there's, at least on my part, absolutely an opportunity here for us to build this back into the budget, we've just got to work out together how to achieve that. But I am absolutely open to that conversation. I believe that Chair Pierce and Commissioner [Bill] Rivenbark are as well,” he said.
Zapple had also previously expressed interest in restoring county funding for affordable housing. Last year, that funding was ended, with Republicans, including Scalise, pointing to The Endowment as a viable alternative source of affordable housing support. There was little discussion of affordable housing this week, but Kostusiak told commissioners that if they wanted to add it in, staff would recommend using $2 million in revenue stabilization funds.
There was some discussion of the $1.6 million ‘non-county agency funding.’ Last year, the county’s now-defunct funding committee had selected nonprofits that were eligible and recommended for grants, but the county cut the funding as part of budget negotiations. The Endowment stepped in with a one-time grant to cover that year’s nonprofit funding, but made no indication that it would offer recurring funding.
Zapple expressed frustration with the decision and noted he’d heard confusion from the nonprofit sector about “where to go” for funding. Kostusiak told commissioners they were still helping nonprofits transition to applying for Endowment funding. Pierce and Scalise said they felt commissioners could still advocate for nonprofits.
The total cost of considerations not currently in the budget is roughly $5.4 million.
Paying the bill
While the preliminary budget presented on Wednesday is balanced for now, there are still a few things to work out. Additional items, like restoring Pre-K funding, will have to pull funding from somewhere. And, even if the budget proceeds as drafted, at least four commissioners would have to sign off on the use of stabilization funds.
Commissioners all agreed that tapping the revenue stabilization fund was a serious decision and acknowledged they didn’t want to make it a pattern.
Commissioner Dane Scalise said while he was optimistic in the long-term outlook, he felt the current U.S. economy had some “questionable features,” and that high costs for gas, health insurance, and rent were negatively impacting residents — presenting a reasonable cause to use the revenue stabilization fund. Republican Bill Rivenbark said he would agree to it, but only for one year, not for recurring funding.
There’s also the issue of the school bond, which will put additional scrutiny on the county’s financial health. As Coudriet noted, the Local Government Commission and bond raters look in part at fund balance to determine a county’s financial health — but they don’t consider a stabilization fund (which is, after all, something most local governments don't have, at least not at the scale of New Hanover County's). Coudriet said that’s why tapping the stabilization fund for one-time uses was preferable because it didn’t impact those assessments. The concern is not that the county wouldn’t get approved for a bond; it certainly would. But the best possible bond rating means the county won’t “pay more” than it needs to, Coudriet said.
Chairwoman LeAnn Pierce echoed that point, saying, “in any given year you would not even hear me considering” using the stabilization fund. But she said the need to be in good financial shape for the bond changed her mind for this year.
Zapple noted that dipping into the stabilization fund would also reduce the interest generated, calling it a “little bit of a double whammy.” He asked Coudriet to take a “hard look” at the general fund balance to see if there was any wiggle room between what’s left in there now and the ‘floor’ set by county policy. Zapple noted he didn’t want to change the policy or go below the current threshold.
Zapple also argued the board should consider raising taxes, potentially in tandem with using some stabilization funds. He seemed to be the only commissioner with an appetite for that, although there are more private and public budget meetings ahead, and things could change. Walker noted that dipping into the stabilization fund would set the county up for the same shortfall next year. She asked staff to draft up a version of the “tax rate if we actually put that in what we needed,” but added, “I’m not suggesting we raise taxes, by any means.”
Coudriet did offer one additional wrinkle in the budget, and that is the impact of the $320 million school bond, which staff expect to pass this November. He noted that in 60 days (i.e., early June), they’ll have to go to the public with the expected tax impact of the bond, which he said would be around 1.75 cents per $100 of property value. But it wouldn't kick in until the 2027-2028 fiscal year (unless commissioners voted to delay it, which Coudriet advised against).
Coudriet noted that meant if commissioners did contemplate a tax increase this year, they’d have to also tell the public about a tax increase on the horizon for the following year: “I don't think it can be bifurcated. It will be exactly as you're approving your budget. Timing has us also telling the community passing the bond will have X equivalent[...] that's going to be a parallel, simultaneous, contemporaneous conversation,” Coudriet said.
Next steps
The meeting ended without a specific direction to staff. Pierce suggested that commissioners meet with her one-on-one, so they could get a “clear consensus” of what they wanted to take back to Coudriet’s office by next week. She indicated that would mean whittling down requests that don’t have enough support to consider.
“If it’s not the will of the majority of this board, we might as well just forget that plan,” she said.
Pierce suggested they would pick the conversation back up at their regular meeting on Monday at 4 p.m.
After that, there’s a final scheduled budget work session on April 30, followed by public engagement, a recommended budget presentation scheduled for May 4, with a public hearing slated for May 18. However, if the budget isn’t passed in May — as was the case last year — there are still two more meetings, on June 1 and 15, before the deadline to pass a budget, which is the end of the fiscal year on June 30.
Disclosure notice: Rob Zapple is a member of the WHQR Board of Directors, which has no say in editorial decisions or news coverage, and who we cover without fear or favor.
Below: Budget work sessions presentation from April 1, 2026.
