The annual budgeting process is typically an exhaustive one for Orange County’s local governments and staff – but this year, it may be even more so with the turbulence of the federal government and alignment with a property revaluation cycle. The result is the town and county governments weighing whether to cut certain services and initiatives to make up budget shortfalls or further raise taxes on top of property tax increases to help cover some of those priorities.
Orange County’s property revaluation process takes place every four years, and the initial round of assessments this spring indicate an increase of more than 38% in the countywide property tax base. With residents seeing some significant increases in their property values and likely a reflective increase on property taxes, it has led to some confusion and concern around just how much will be required when the tax bills for next year come through. Several Orange County residents came out to comment to the Board of Orange County Commissioners during its meeting on April 15 about this, with people requesting the county be wary of going beyond a revenue-neutral tax rate and further increasing the costs. Adding to the constituents’ fear are the efforts from President Donald Trump’s administration to trim federal funding for a variety of departments, including potential cuts to federal income programs and benefits.
“What hit home in particular,” Chair of the County Commissioners Jamezetta Bedford told 97.9 The Hill, “is that a couple people said – and they said it with that shake in their voices – that they had to check whether their Social Security check had been deposited, with what’s going on at the federal level. You could just see the anxiety in their body language and hear it in their voices.”
If the tax rate is kept revenue-neutral, though, it may leave the local governments on the hook to cover gaps in federally funded programs that may not see the same allocations as before – if any. And that comes as Orange County and the municipalities weigh paying for necessary infrastructure updates and long-term capital needs alongside taking on those additional funds.
“We are going to be very serious about what are ‘needs’ and investments we need to do, and what are ‘wants,’” said Bedford. “I threw out to the audience, ‘Keep coming, pay attention to the budget – and what are some of the things you’re willing to live without? What are the prospects that you are willing to cut in order to maintain your home and stay in the county?’”
“People want us to commit to ‘only raise taxes this much, or ‘don’t raise them at all,’ and I feel that’s not our fiduciary duty,” added the board chair. “We have to listen, read and go page-by-page, hear the staff, hear the presentations, hear from the public, and then try to make the best decisions for the county and for our residents.”
The Chapel Hill Town Council meets Wednesday night and will hold a public hearing dedicated to constituents’ concerns about this upcoming budget. During a work session last week, town staff said they must address a $6.7 million funding gap projected for the next fiscal year as the town government works through the allocations for services, capital projects and staff. Chapel Hill’s general fund budget for FY2026 is a projected $89.3 million.
When asked how the town got to this level of disconnect between its revenue and expenditure, Chapel Hill Mayor Jess Anderson partially attributed it to preparing for the loss of federal funds. Other factors are both national and self-imposed – as the town sought for years not to raise taxes on residents amid the economic challenges presented by the COVID-19 pandemic. But now, Anderson told 97.9 The Hill, the town’s elected officials may have to.
“Our sales tax revenue has been flat and our permitting and inspections [revenue] has been flat,” she said, “and that’s partially because people are not coming in to do projects because of the economy [and] a lot of things. But also, we – over many years – have really tried to avoid raising taxes, and over the past few years we’ve been working really hard to even that out.
“Of course, now with the current chaos and uncertainty at the federal level,” the Chapel Hill mayor said, “that’s really where it compounds all of it and we have that deficit…because we were trying to make up for the federal funding that was supposed to come in.”
The Chapel Hill Town Council will look to balance funding social services and resources with a tax bill expected to already rise for residents because of new property values. (Photo via the Town of Chapel Hill.)
During one of its initial budget work sessions with the town council on April 8, Carrboro’s town staff shared initial general fund expenditures and estimates for the upcoming fiscal year. Not including federal funding, the town is facing a second consecutive year of needing its fund balance to cover a gap between the expenses and revenue – a projected $5.1 million in FY2026. But that gap comes alongside a variety of budget priorities sought by the town manager and requested by council members, including more allocations for affordable housing efforts, sustainability initiatives, design phases for the Bolin Creek Trail, Chapel Hill Transit and personnel initiatives. The net total of those line items, as presented, was $5.9 million.
With those estimates and the swirling external factors, Carrboro Mayor Barbara Foushee warned of some difficult decisions that will need to be made by the town staff and council.
“There will be a lot of pressure on our budget this year with the priorities,” she said to 97.9 The Hill, “and then just adding in all the things going on around us. Chapel Hill Transit [wants] and increase in funding, OWASA rates are going up, and then of course the property revaluation that property owners are experiencing. It’s going to be a different budget picture.
“The primary thing for us,” Foushee concluded, “is the federal funding that’s tied to our transportation projects. That is of great concern.”
Scaling back on bus routes and operators was one of the potential cuts presented to the Chapel Hill Town Council by its staff – along with cutting funding to its crisis response program and downtown patrol units for the police department. Those options were dismissed at the work session, with Anderson later saying she believes it could both fail to achieve long-term savings and align with the town’s values when facing challenging times.
“Reducing services for our most vulnerable population is not a direction we want to go,” she said. “Cutting services means that you’re also cutting resources for people who need them. Figuring out how we balance that with not making things unbearable for folks from a tax perspective is our job.”
The Chapel Hill town manager will present her recommended budget at the council’s May 7 meeting, one day after the Carrboro town manager presents her recommended budget to the respective elected officials. The public will have more time to provide feedback before the towns’ and county’s budgets – and tax rates – must be approved in June.
Featured photo via the Orange County Government.
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With Federal Funding Losses and Revaluation, Orange County’s Governments Weigh Difficult Tax Rate and Budget Choices Chapelboro.com.
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