The looming threat of state-level restrictions on local property tax hikes has thrown Elon’s municipal leaders into a frenzy of brainstorming as they struggle to balance the books with the diminishing sources of revenue at their disposal.
The members of Elon’s town council ultimately bandied ideas ranging from new service fees to staffing reductions on Tuesday as they braced themselves for a potential change to the state constitution that could limit the ability of local governments to jack up their property tax rates.
Last month, this prospective amendment received an endorsement from a select committee of North Carolina’s state house that has been convened to address property tax reduction and reform. On Wednesday, the members of this same 29-person committee lent their support to a proposed referendum on November’s ballot that would be necessary for this prospective constitutional change to take effect.
In its current form, the proposed ballot item would ask the state’s voters to enable the legislature to “enact general laws limiting the amount by which the levy of taxes on property may increase.” These limits would be imposed on top of an existing restriction that caps the local property tax levy at $1.50 for every $100 of value.
During Wednesday’s committee meeting, Rep. Brian Echevarria, a Republican from Cabarrus County, argued that this potential change is more about safeguarding property owners than curbing the ambitions of local officials.
“Homeowners across our state have been confronted with significant increases in property tax bills. The key policy issue before us is not whether local governments need revenue. They do . . . the question before this committee is whether North Carolinians should be protected from continual, unsustainable property tax increases or not.”
– State Rep. Brian Echevarria
“Homeowners across our state have been confronted with significant increases in property tax bills,” he declared when he laid out the argument in support of the amendment. “The key policy issue before us is not whether local governments need revenue. They do…the question before this committee is whether North Carolinians should be protected from continual, unsustainable property tax increases or not.”
In order to appear before the state’s voters this fall, this proposed amendment must first win over three fifths of both chambers of North Carolina’s General Assembly. Once it gets on the ballot, a simple majority vote will suffice for the change to become effective in January of 2027. The legislature would then have the authority to impose a ceiling on the annual increases that a local government can apply to its property tax rate.
Notwithstanding the assurances of supporters like Echevarria, the gathering momentum in support of this state-level proposal hasn’t been entirely welcome to local officials who rely on property tax revenue to fund everything from law enforcement to public parks.
In Elon, the potential passage of this constitutional amendment has been especially troubling for councilman Randy Orwig, who voiced his anxiety when the town’s next annual budget came up for discussion on Tuesday.
“This is a political issue…and it’s going to bring out people to vote for it. I’m feeling a sense of pressure over the tax increase because of what’s happening. . . I think we have to have that conversation because – whether it’s 7 cents, 8 cents, or 9 cents – we may not have the power to do it next year.”
– Elon town councilman Randy Orwig
“This is a political issue…and it’s going to bring out people to vote for it,” Orwig warned the rest of the council that evening. “I’m feeling a sense of pressure over the tax increase because of what’s happening…I think we have to have that conversation because – whether it’s 7 cents, 8 cents, or 9 cents – we may not have the power to do it next year.”
At the moment, Elon’s town council is eyeing a prospective property tax hike of 5 cents which appeared in a proposed spending plan that town manager Richard Roeder had unveiled to its members in March.
None of Orwig’s colleagues echoed his inclination to ramp up this increase on Tuesday and make hay, so to speak, while the sun continues to shine on the town’s taxing authority. Even so, other members of the council shared his frustration over the potential ramifications of the proposed state constitutional change.
Elon’s mayor Emily Sharpe speculated that the amendment’s enactment would force the council to charge unpopular user fees for even the most basic of municipal services.
“How else can you pay for these services?” she inquired rhetorically. “Will we charge a fee for every child that plays on the playground? Will people be afraid to call the police department because they don’t want to pay the fee?”
The plight of local government leaders wasn’t lost on the committee’s co-chair, Julia C. Howard, a Republican whose district includes portions of Davie, Yadkin, and Rowan counties.
“You’re absolutely just reaching in and taking part of their tax base,” Howard declared shortly after the committee convened in Raleigh on Wednesday. “But they are still responsible for doing the things that they’re required to do.”
All the same, the populist appeal of the proposed ballot item ensured its eventual endorsement by the select house committee. It has also prompted Elon’s municipal leaders to explore spending cuts as well as alternative sources of revenue as they prepare for the next fiscal cycle to begin on July 1.
During Tuesday’s town council meeting, Roedner tossed out a number of potential new service fees – with varying reactions from the town’s elected leaders.
The council was particularly enthusiastic about the town manager’s recommendation for a surcharge to defray the credit card fees that the town currently incurs when residents opt to make payments with “plastic.” Roedner predicted that the town could recoup $10,000 to $15,000 a year through this surcharge.
A majority of the council also favored a user fee on bulk waste pickups, although they balked at a similar imposition on the town’s now free collection of yard waste. Meanwhile, the town’s elected leaders generally seemed open to the idea of parking fees in some parts of the community – a prospect that Roedner predicts would bring in $200,000 in the next fiscal year [See separate story in this edition].
Roedner informed the council that his plan is to use any new revenues that the council approves to reduce the amount of savings he has penciled in to balance the town’s budget. He added that the $360,000 in fees that he proposed on Tuesday would lower this line from roughly $1.1 million to $777,883.
The council was a bit less receptive to some proposed spending reductions that Roedner also presented during Tuesday’s discussion. These potential cuts included the elimination of a now vacant police officer position that the town manager estimated will trim the town’s budget by $98,000. Roedner also suggested line-item changes in public works and the fire department that would save another $74,117.
Roedner generally discouraged cuts in employee benefits in order to further reduce the town’s outlays. He insisted that these reductions would put Elon at a competitive disadvantage as it struggles to attract and retain the best and the brightest to its municipal staff. He was nevertheless willing to entertain some revisions to the fringe benefits that future hires will receive from the town.
Among the proposals that had the most traction with the council were a move away from annual “longevity” bonuses to less frequent, but larger, payments when staff members reach certain milestones – such as their fifth year in the municipality’s employ. The council also embraced a proposal to replace the town’s automatic 5-percent contribution into each employee’s 401-k with one-to-one match of the staff member’s own investment. Both of these measures would apply to future hires rather than anyone presently on the town’s payroll.
Some of the town’s current staff members were nevertheless writhing in protest when mayor Emily Sharpe shared her own observations about the generosity of the town’s employee benefits.
“You get a COLA, a merit bonus, a longevity bonus, free healthcare, and an educational supplement. I hope people understand that you don’t get these things if you work in the private sector.”
– Elon mayor Emily Sharpe
“You get a COLA, a merit bonus, a longevity bonus, free healthcare, and an educational supplement,” she said. “I hope people understand that you don’t get these things if you work in the private sector.”
In the meantime, Roedner encouraged the council not to sit idly by while the proposed constitutional amendment continues to wend its way through the General Assembly.
“This has happened in this country before. Massachusetts had prop 2 1/2 that said the tax rate couldn’t go up more than 2 1/2 percent a year. California had Prop 13,” he recalled. “It makes a messier tax situation when the states get into this area. If the state hamstrings local government on taxation, that limits our ability to provide the services that residents want . . . So, if you haven’t contacted your state legislators, please contact your state legislators.”
