Another variable: how much will property tax base change?
For many years, North Carolina’s sales and use tax had been something of a financial bungee cord for local governments in Alamance County. It almost went without saying that, no matter how badly they botched their other revenue projections, city and county officials could count on the better-than-expected sales tax receipts to pull them back from fiscal disaster.
Lately, however, some local officials appear to be losing their faith in this perennial safety line – at least based on the budgets they’ve drafted for the upcoming financial cycle.
Earlier this month, the top-ranking administrators for Alamance County and the city of Mebane released proposed budgets that actually predicted reductions in sales tax receipts for the next fiscal year. Meanwhile, most of the county’s other cities and towns are anticipating a bump of 1.2 to 3 percent in this levy, although some are a little jittery about these projections in light of their general uncertainty about the economy.
This sense of angst has even gripped Elon’s town manager Richard Roedner who, on paper, is projecting a rather optimistic increase of 8.5 percent in the town’s sales tax receipts. Roedner has nevertheless made it clear that he isn’t betting the proverbial farm on this particular levy.
“Sales taxes are notoriously volatile. Revenues that are affected by the economy are hard to predict…and the costs associated with the ongoing economic changes have not been factored into next year’s budget, as there is no sound way to predict the impacts on our operations of things like tariffs.”
– Elon town manager Richard Roedner
“Sales taxes are notoriously volatile,” Roedner asserted when he released his proposed budget to Elon’s town council in April. “Revenues that are affected by the economy are hard to predict…and the costs associated with the ongoing economic changes have not been factored into next year’s budget, as there is no sound way to predict the impacts on our operations of things like tariffs.”
Capitol gains
This trepidation about the future has been distinctly more muted at the state level, where the legislature’s budgetary wizards are prognosticating a higher return on the sales and use tax than most local government officials have been willing to hazard.
Two months ago, the N.C. Office of State Budget and Management issued a revenue forecast that predicted a 4.8 percent bump in the haul from the sales and use tax for the fiscal year that begins on July 1. This “consensus budget forecast” has been transplanted wholesale into the spending bill that’s currently making its way through the Republican-led General Assembly. Meanwhile, North Carolina’s Democratic Governor has proposed a slightly lower increase of 4.5 percent in his own recommended spending plan for the state.
These state-level figures apply strictly to the 4.75 percent levy that North Carolina’s state government receives from the sale of goods and services. Localized projections are also available, however, from the North Carolina League of Municipalities, which serves as an advocacy group for the state’s cities and towns.
In March of this year, the League of Municipalities published its own revenue estimates, which predicted a statewide increase of 2.8 percent in the local share in the sales and use tax. The league’s publication nevertheless admitted a fair amount of uncertainty in this revenue projection.
“Much will depend on actions at the federal level,” the organization asserted. “Will significant tariffs be implemented and maintained? How much will layoffs or immigration actions impact the workforce? These actions have the potential to lead to increased inflation, which contributed to increasing sales tax revenues in recent years. But any inflation in the coming fiscal year is unlikely to be paired with direct fiscal assistance [from the federal government].”
[Even though the North Carolina League of Municipalities projected statewide sales tax revenues to increase 2.8 percent, Haw River town manager built in only a 1.8 percent increase] “to be cautious of overestimating sales tax growth.”
– Haw River town manager Sean Tencer
The league’s revenue projection was actually cited by Haw River’s town manager Sean Tencer in his proposed budget for the next fiscal year. Tencer nevertheless knocked a percentage point off of the organization’s statewide estimate and proffered a 1.8 percent increase in his own recommendation to Haw River’s town council. The town manager insisted that he chose this reduced figure “to be cautious of overestimating sales tax growth,” which he insisted “has been slowing down due to inflation.”
Negative territory
Caution has likewise reigned among Alamance County’s top brass – although in their case, the sense of trepidation has more to do with the county’s actual sales tax receipts than any recent statewide projections
Last month, Steve Carter, the vice chairman of Alamance County’s commissioners, put his fellow commissioners on notice when he announced that the county sales tax receipts for the current fiscal year were roughly $1.4 million behind the budgeted estimates.
In a subsequent interview, Susan Evans, the county’s finance director, characterized this $1.4 million gap as a mere “picture in time” that was likely to change by the fiscal year’s end on June 30. Yet, the situation remained precarious enough by the third week of May for Alamance County’s manager Heidi York to predict a decrease in sales tax receipts when she unveiled her proposed budget for the next fiscal year.
“We’re seeing slower sales tax growth, rising costs in vehicles, construction, and commerce, as well as potential impacts from tariffs and possible recession on the horizon, and all these [factors] put pressure on the county’s finances.”
– Alamance County manager Heidi York
In her presentation to the board of commissioners, York acknowledged that the $45.6 million she anticipates from the sales and use tax is roughly $368,300 less than her projection in the spring of 2024. Although this decrease amounts to less than a single percentage point, it is nevertheless one of several factors that the county manager attributed to her generally dour mood about the county’s finances.
“We’re seeing slower sales tax growth, rising costs in vehicles, construction, and commerce, as well as potential impacts from tariffs and possible recession on the horizon,” she added, “and all these [factors] put pressure on the county’s finances.”
These macrocosmic concerns have also been weighing on Mebane’s city manager Richard White, who like York has projected a slight dip in his jurisdiction’s sales tax receipts.
Earlier this month, White unfurled a spending plan for the city that forecasts sales taxes at about $6.9 million – or roughly $57,000 less than the city’s current annual budget predicts. White told The Alamance News that his projection for the upcoming year is partly influenced by economic uncertainty at the federal level.
“It has to do with the national situation,” he conceded. “But it’s also based our projections for 2025, which show that we might come in about $20,000 under budget.”
A rhapsody in green
There hasn’t been a whole lot of fuss about sales tax projections in most of the county’s other cities and towns.
Burlington’s city manager, who presented his proposed budget last Wednesday, acknowledged that he’s predicting the city’s sales tax receipts to go up about 3 percent in the next fiscal year.
[Story continues below photos of town and city managers in Burlington, Graham, Mebane, and Gibsonville.]
In the city of Graham, the sales and use tax is lumped into the broader category of “unrestricted intergovernmental revenues,” which are collectively projected to go up nearly 8.9 percent. Graham’s city manager Megan Garner has nevertheless assured this newspaper’s publisher that the city’s disentangled sales tax receipts are likewise projected to “increase,” although she couldn’t recall the precise percentage when he posed this query to her at a city council meeting two weeks ago.
Garner subsequently informed the newspaper that her budget projects a sales tax increase of 2 percent.
In the town of Gibsonville, a straightforward rendering of sales tax receipts is complicated by the fact that the community straddles the Guilford-Alamance county line. According to the spending plan that town manager Ben Baxley has shared with the town’s board of aldermen, the next fiscal year is predicted to bring in $1,680,000 in sales tax receipts from Alamance County – an increase of $42,000 or about 3 percent. Meanwhile, the proceeds from Guilford are expected to slip by $11,000, or about 1 percent, to end the financial cycle at about $900,000. Taken together, these figures come to a total of $2,580,000 – an increase of $31,000, or just over 1.2 percent.
Of Alamance County’s six largest municipalities, Elon boasts the largest proportional increase in its budgetary projection for the sales and use tax. Yet, this 8.5 percent leap from $3.6 million to $3.9 million is apparently something of political decision, as Elon’s town manager Richard Roedner acknowledged when he debuted his proposed budget in April.
In his presentation to Elon’s town council, Roedner recalled that he had followed his own “conservative” instincts when he proposed a sales tax haul of $3.6 million in the spring of 2024. He went on to concede that this figure has proven far lower than the $4 million that he presently expects Elon to take in by the end of the fiscal year. As a result, Roedner said that the town’s budget committee pressed him to nudge up this figure for the coming year so that it’s closer to this year’s anticipated sales tax receipts.
“And at the request of the budget committee, I went up to $3.9 million,” the town manager went on to add when he explained his calculations to the council.
Roedner’s admission prompted councilman Randy Orwig to observe that the latest sales tax projection is “less conservative” by the town manager’s own reckoning.
“And we’re going into a year that’s anything but conservative,” Roedner replied. “I’m not an economist, so I have a lot of angst about the next fiscal year.”
Tagging the (tax) base
The variations in local sales tax projections don’t seem to extend to the other big revenue source for Alamance County and its municipalities.
As part of its revenue calculations, each local government must ultimately determine the overall size of its property tax base – which indicates, in turn, its expected property tax proceeds for the coming financial cycle.
This cumulative total of all a jurisdiction’s taxable property changes from year-to-year for one of two reasons. In some years, a countywide revaluation will result in a wholesale adjustment of tax values to match the ebb and flow of the real estate market. Meanwhile, new construction and renovation has a more modest but steadier effect on the tax base that extends to the years between revaluations.
This “natural growth” in the tax base is stated outright in Heidi York’s proposed budget for Alamance County. According to the county manager’s spending plan, this 2.9 percent increase is “slightly higher than the current rate of inflation.”
In Burlington, city manager Craig Honeycutt has estimated a comparable increase of 3 percent in the city’s tax base.
In Mebane, things get a bit muddled due to the city’s location on the border between Orange and Alamance County. According to city manager Richard White, Orange County completed its latest four-year revaluation in 2025, while Alamance County, which also conducts revaluations on a four-year cycle, isn’t due for its next mass reassessment until 2027. In spite of this complication, White has arrived at a figure of nearly $5.1 billion for the city’s cumulative tax base – an increase of about 3.9 percent from last year’s sum of almost $4.9 billion.
Meanwhile, Richard Roedner in Elon is calling for a comparatively meager bump in his community’s tax base based on the building occupancy permits that the county’s inspections department has recently issued. Based on this data, Roedner anticipates the overall tax base to rise from $910 million to $915 million – a increase of about half a percentage point.
