Chapel Hill homeowners could pay higher property taxes for a proposed $143.7 million town budget that includes more money for staff pay, town vehicles and parks.

The draft 2023-24 budget is an 11% increase over last year’s $129.3 million budget and includes a 5% pay raise for town employees.

Interim Town Manager Chris Blue is expected to recommend a roughly 10% tax hike to help pay for it when he meets with the Town Council on Wednesday at Chapel Hill Town Hall. The 7 p.m. meeting will be livestreamed at chapelhill.legistar.com/Calendar.

The proposed budget includes both a daily operations budget and a capital improvements budget for construction and big-ticket purchases. A presentation posted before Wednesday’s meeting highlighted a few ways the extra tax dollars could be used, including:

▪ $250,000 for small capital projects like replacing roofs at the Chapel Hill Community Center and Chapel Hill Post Office on East Franklin Street.

▪ $750,000 for vehicles, including four police cars, a solid waste front loader, and three parks and public works trucks.

▪ $971,000 for parks projects, including a new master plan, replacement tennis courts, basketball goals and playgrounds

▪ $250,000 for fire equipment, rescue tools and an all-terrain vehicle

▪ $500,000 for a greenways planning manager and design work for the Campus to Campus Greenway

The proposed tax rate increase — from 52.2 cents to 57.2 cents per $100 in assessed property value, a nearly 10% hike — would add $200 to the bill for a home valued at $400,000.

Chapel Hill residents also pay county property taxes and a special tax if they live in the Chapel Hill-Carrboro City Schools district. County Manager Bonnie Hammersley has recommended a 0.46-cent county tax rate increase for next year, and a 1.5-cent tax rate increase for the city schools district. Those would add another $78.40 increase to the total tax bill for a $400,000 home.

The town’s stormwater fee would remain the same.

The council is scheduled to hold a budget public hearing on May 24, and could adopt the budget on June 14.

Tax increase, backlog of expenses

Blue warned the council in February that the town faced a $60 million backlog for over a decade of delayed maintenance, an aging vehicle fleet, and growing inflation and personnel costs. The backlog includes:

▪ $1 million for employee recruitment and retention and $3.2 million to add new positions

▪ $6.8 million for core services, including technology and program needs

▪ $10.1 million for building maintenance and repairs, identified in a 2017 town study. The town started to address the needs in 2018, but COVID delayed the work. Pandemic money met some needs, but that is running out.

▪ $9.3 million to replace and maintain town vehicles. Roughly 53% of those 400 vehicles, plus fire trucks and buses, are either due or past due for replacement, staff has said.

▪ $30 million for affordable housing.

Council members have only voted to raise taxes in five of the last 14 years, for a total cumulative tax rate increase of 6.68 cents since 2009, or less than 1% each year. Blue reiterated the need for a tax increase in a budget message last week to the council.

The proposed increases are “not excessive,” he said.

“For too many years, we have maintained funding levels while costs have risen and we are unable to continue operating this way. It is time to acknowledge that, in order to address the significant backlog of unaddressed needs, we need this increase,” he said.

While sales tax revenues and property values have grown in the last few years, the town has largely relied on its fund balance — undesignated money from the previous year — to cover shortfalls.

There are no luxuries in the town’s budget to cut, Blue said, and the backlog is keeping it from giving employees the resources to do their jobs and paying them competitive wages.

At least nine of the town’s 16 garbage trucks and multiple fire trucks have been down for repairs in the last year, 60 of 80 police vehicles have come due for replacement, and three of the town’s five fire stations have been assessed as no longer meeting firefighting needs.

Staff burnout and turnover also has been high, with employees leaving for better pay and more affordable homes in other communities, staff has said. The proposed budget includes money for 11 full-time positions, as well as an incentive for employees with dual language skills.

The story will be updated as more details are released.