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1 <br /> ORANGE COUNTY <br /> BOARD OF COMMISSIONERS <br /> ACTION AGENDA ITEM ABSTRACT <br /> Meeting Date: April 15, 2025 <br /> Action Agenda <br /> Item No. 7-a <br /> SUBJECT: Revenue Neutral Tax Rate for FY 2025-26 <br /> DEPARTMENT: County Manager's Office <br /> ATTACHMENT(S): INFORMATION CONTACT: <br /> Presentation Travis Myren, 919-245-2308 <br /> Kirk Vaughn, 919-245-2153 <br /> PURPOSE: To review the revenue neutral tax rate calculation for FY 2025-26. <br /> BACKGROUND: The Tax Administration Department has completed the 2025 revaluation of real <br /> property. The revaluation is intended to adjust property values to reflect market value as of the <br /> appraisal date of January 1, 2025. <br /> The 2025 revaluation was mandated in 2022 when the County's sales ratio or the comparison <br /> between assessed value and market value dropped below 85%. NCGS 105-286(a)(2) states: <br /> A county whose population is 75,000 or greater according to the most recent annual <br /> population estimates certified to the Secretary by the State Budget Officer must conduct a <br /> reappraisal of real property when the county's sales assessment ratio determined under G.S. <br /> 105-289(h) is less than .85 or greater than 1.15, as indicated on the notice the county receives <br /> under G.S. 105-284. A reappraisal required under this subdivision must become effective no <br /> later than January 1 of the earlier of the following years: <br /> a. The third year following the year the county received the notice. <br /> b. The eighth year following the year of the county's last reappraisal. <br /> The sales ratio for 2022 was 0.8197 which was below the standard of 0.85 and triggered a <br /> mandatory revaluation within three years. By 2024, the sales ratio had dropped to 0.6445. <br /> The 2025 revaluation resulted in a 38.6% increase in the total tax base compared to FY 2024-25, <br /> increasing the total tax base by $9 billion to $32.6 billion. <br /> Property tax revenues are calculated by applying a property tax rate to the property tax base. If <br /> the tax rate were left unchanged following a revaluation, property tax revenues would <br /> automatically increase as a result of the increased property tax base. However, the State of North <br /> Carolina requires counties to publish a revenue neutral tax rate following a revaluation. The <br /> revenue neutral tax rate is the tax rate that would produce the same amount of revenue that was <br />