Property taxes are the main funding source for local government, followed by sales tax. Property tax is assessed based on a rate per $100 of property value, so you'll often hear discussions of taxes going up or down by a few cents — but those cents add up. For a $500,000 house, every cent of the tax rate is $50 per year, so a tax rate of say 40 cents per $100 would be $2,000 annually.
The other factor is 'reevaluation,' which is when counties reappraise the value of all the properties on the tax roll. In North Carolina, this has to happen every eight years, but many counties do it more frequently, because the longer you wait between reevaluations, the more the assessed value (and thus potentially the tax bill) is likely to go up. More frequent reevals can cushion the shock of a dramatic increase in value. While revals are based on some of the factors that influence the free market, a property's tax value is not the same as its listing price (in other words, Zillow and the government probably won't agree on exactly what your house is worth).
Ben Schachtman: Alright Kelly, we’ve been getting quite a few questions about taxes.
Kelly Kenoyer: We have, it’s true. And while a lot of this is still up in the air, we can at least give you an update on where things stand.
BS: Ok, first we should say that we’re talking about property taxes — so if you’re a homeowner, or own a commercial property, you’re going to get a bill. If you’re a renter, like me, you won’t — although it’s safe to say apartment complexes are going to pass along tax increases to tenants. Private landlords you might be able to haggle with.
KK: And if you live in a municipality, like Wilmington, or Leland, you’ll be paying two property taxes – even if it comes on one bill – one for the county and one for the town or city you live in.
BS: Ok, so let’s do counties first. New Hanover County is in the midst of an interesting negotiation – We’ve got a deep dive in our latest Sunday Edition newsletter, but for time, I’m simplifying a bit here – basically, Republican commissioners want to keep taxes the same as last year, and cover increased expenses by using the revenue stabilization fund.
KK: That’s a $300 million pot of money left over from the hospital sale.
BS: Right, but it takes four votes to access it. Republicans don’t have the votes because Democratic commissioners are really hesitant to go for that — they’ve said they want to just set the tax rate where it needs to be to fund the county, instead of dipping into savings. So, if that means a tax increase, that’s probably what they’ll push for.
KK: But Democrats don’t have the votes either, so it’s kind of a stalemate.
BS: Yep. That’s a stay tuned.
KK: Pender County has its own interesting situation, after commissioners voted to basically put off the property revaluation until next year.
BS: Yeah, the new property values were much higher, very much like what happened in New Hanover County last year.
KK: Except in Pender, it had been even longer, over seven years, so the sticker shock was intense. And there’s been questions about whether the revaluation was accurate – so they’re putting it off while they look at that… even though it might be breaking the law.
BS: Yes – state law requires counties to do this every eight years, and Pender is up against a deadline. State officials have told them they should reverse their decision because they’re misaligned with state law, and could even be investigated by the state attorney general’s office, but they’re holding firm, hoping the state could pass a local law giving them some leeway.
KK: In the meantime, they still need to pass a budget – and we know costs are up. The school district, for example, says it needs over $6 million in additional funding, So, we could see a tax increase, even if property values stay where they are.
BS: Well, by comparison, Brunswick County seems pretty tame. They’re not doing a revaluation this year, and we haven’t heard any talk about a major increase or decrease. Commissioners will get a look at a preliminary budget in early May, with the official budget recommendation in mid-May. Brunswick’s also looking to put a major school bond on the ballot, with $350 million in funding.
KK: Shifting to municipalities, Wilmington is almost definitely looking to raise taxes. A major part of that is new city manager Becky Hawke’s plan to boost city employee salaries across the board to a "living wage," intended to help the city stay competitive. That would raise the lowest city salary from around $38,000 dollars to over $45,000.
BS: That’ll come at a cost, and city council is looking at raising taxes by between 4 to just over 6 cents per $100 dollars of property value. For the median valued home in the city, that means between an additional $178 and $279 dollars per year. And, if the county raises taxes, that would be a separate increase.
KK: One place we’re actually seeing a decrease is in Leland, which is way ahead of the game in passing a budget. After an unpopular increase a couple of years ago, this year the town cut the tax rate by 2 cents, a reduction of about seven and a half percent. Still, advocates were angry with the council and said they didn’t cut it far enough.
BS: Well, for the rest of the local governments, there’s still some time to work out the details.
KK: That’s right, county, city, and town managers have until the end of May to present a recommended budget, and the deadline to pass a budget is the end of the fiscal year, on the last day of June.
BS: And a lot could change before then, and we’ll be keeping an eye on things, but for now, thanks for helping us answer these tax questions!
KK: Anytime.
Residents who cannot afford their tax bills and qualify for a short list of exemptions can get information and apply here.
