Agenda - 05-19-2009 - 7b - Laserfiche WebLink

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Budget Message Recommended Tax Rates Ad Valorem Tax Rate — Revenues generated by the county's ad valorem property tax support day-to-day County and School operations budgeted in the General Fund. The recommended ad valorem property tax rate for next year totals 85.8 cents per $100 of assessed valuation. This rate is the revenue neutral rate. One cent on the property tax rate should generate $1 ,505,352 in the upcoming fiscal year. Chapel Hill Carrboro City Schools District Tax — The voter approved Chapel Hill City Schools District Tax provides additional revenue to the school district over and above the County's ad valorem tax. This recommended budget provides for the revenue neutral rate of 18.84 cents per $100 assessed value. The approved tax rate for the current year is 23 cents per $100 assessed value. Based on this tax rate, the District will receive an estimated $18,721 ,785 or $1 ,597 per pupil. One cent on the school special district tax should generate $993,725. Voters in the Orange County School District have not authorized a special district tax to supplement its amount received from the County's General Fund for current expense. Fire District Tax Rates — As outlined in the Fire Districts section of the recommended budget, revenue neutral tax rates range from 2.16 cents to 7.85 cents per $100 valuation. Some districts have requested tax rates above the revenue neutral rate. In those instances I have recommended the revenue neutral rate and have notified the districts they will need to present their needs to Commissioners at a work session in June. This approach is consistent with Board direction to me earlier this spring. Revenue Highlights Property Tax Revenue - Property taxes make up $130.6 million, or 73.5%, of the recommended General Fund revenue base of $177.6 million. This equates to a $2.2 million increase from the current year budget of $138 million and is reflective of natural growth in the tax base. Sales Tax Revenue — Sales tax revenue for FY 2009-10 decreases by $2.1 million. The reason for the decrease is two-fold. The foremost reason relates directly to the General Assembly's Medicaid Relief/Sales Tax Swap legislation approved in 2007. A key component of that legislation provided for the State to "relieve'11 counties of their longstanding responsibility of paying Medicaid costs. In turn, recognizing the State had no revenue to cover this new financial responsibility, the General Assembly decided to use proceeds from Article 44 sales tax to cover the cost. The Board may recall counties have been authorized to collect Article 44 sales tax since the State took Intangibles Taxes from local governments in 2001 . In addition, the legislation reverted a small portion of counties' remaining sales taxes to towns in an effort to hold those entities harmless from potential loss of sales taxes because of the legislation. The phased in Medicaid Relief/Sale's Tax Swap plan began in 2007 and will be fully implemented by July 1 , 2009. Thus, the amount of money budgeted for Article 44 sales tax in FY 2008-09, $1 .9 million, will decrease to zero in FY 2009-10. To offset that loss of