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Pinehurst Council Debate Tax Rate

By MARY KATE MURPHY || || May 27, 2023 ||

As they prepare to adopt a village budget for 2024, Pinehurst’s leaders are divided between banking more money for future building projects or leaving it in property owners’ pockets.

The Village Council held a public hearing Tuesday on the proposed $26.9 million budget. That budget is based on a tax rate of 23 cents for every $100 in property valuation.

While that’s an eight-cent reduction from the current tax rate, after the recent countywide property revaluation it would still represent a higher tax bill for most addresses in Pinehurst.

If the Village Council implements the 23-cent tax rate, Pinehurst is projected to bring in $1.4 million in additional property tax revenue more than it did in the current year. But proposed expenditures will be down 8 percent, partly thanks to a temporary break in the village’s schedule of planned building projects.

If set aside as part of Pinehurst’s fund balance at the end of the fiscal year, the difference would bring that account to more than $18 million — or about 68 percent of the village’s annual operating budget.

“That’s on the high end for us, but it’s on the high end because we’ve specifically planned it that way,” said Village Manager Jeff Sanborn.

But it’s higher than some council members are comfortable with considering that most village residents will pay appreciably more in property taxes than they did last year. Council members Patrick Pizzella and Jane Hogeman both said that they would support a 22-cent tax rate that falls closer to a true “revenue neutral” level.

Pizzella said that Pinehurst is still likely to have bankable funds left over at the end of the year even at the lower rate. As it is,he pointed out that the village’s savings far exceed the level suggested in the council’s policies.

“It demonstrates a very healthy amount of money in the kitty. At 22 cents, the one-cent reduction that I’m discussing, we will still have in our fund balance $17.6 million,” he said.

“So it’s not a drastic difference allowing a little more of our funds that we collect, a little more of that to be left in the hands of our village taxpayers.”

Hogeman pointed to the “unprecedented” property revaluation, which increased the value of Pinehurst’s tax base by close to 50 percent, in supporting the lowest tax rate possible.

“Many of the affordable and more modest units went up at a higher rate than other residential properties,” she said. “So it seems to me that if we can give a little bit of relief in this first year, if we can afford to do that without jeopardizing our five-year plan, it would be a humane thing to do.”

Sanborn said that while a 21.2-cent tax rate would completely offset the property revaluation to be “revenue neutral,” adjusting that amount for inflation over the last year would result in a 23.5-cent tax rate.

“So we’re a little bit below that,” he said.

The other three council members, though, were in favor of the proposed 23-cent tax rate as more consistent with Pinehurst’s need for capital funding beyond the coming year. Major projects in the village’s five-year plan include building a new public library away from the Village Green, and relocating its public works complex so that its current McCaskill Road site can be redeveloped in keeping with the council’s newly approved plans for Village Place.

“The staff put this together with the idea that it’s not just one year that we’re looking at. It’s a five-year plan, and that’s a best practice,” said Council member Jeff Morgan.

“Sure, we can vote on it and make the adjustment but in the long term we’re robbing Peter to pay Paul, because we still have the capital expenditures that are coming up.”

Laura Sumrall, one of two residents to address the budget in comments to the council on Tuesday, said that reducing the rate to 22 cents would demonstrate that village officials are sensitive to the effect of inflation and the property revaluation on residents.

“It’s more symbolic than it would be economic, really, and I think that the people kind of like to know you’re hearing us,” she said.

Pizzella also questioned the wisdom of setting aside even more money for planned building projects that are subject to change.

But Mayor John Strickland and Councilmember Lydia Boesch both see the 23-cent rate as insurance against a steep tax hike in the near future. The village’s five-year plan includes another one-cent increase to 24 cents in 2026 to generate money to staff the new library and Tufts Archives.

“I like a situation where we can create consistency for taxpayers,” said Strickland. “We have the capacity to reduce the rate a little more this year than is proposed in the budget, but if we do that and we look out the five years, inevitably we’re going to see some increases.”

Next year’s proposed budget includes $2.8 million for smaller capital projects, accounting for about 10 percent of total spending. That covers $460,000 to add sidewalks, $430,000 for stormwater drainage projects, $490,000 for a garbage truck and four police vehicles, and $200,000 for streetscape improvements in the Village Place area as well as $160,000 for police radios.

Employee salaries and benefits are the primary area of cost increase in the proposed budget. They account for 57 percent of the village’s proposed spending in the upcoming fiscal year, up from 51 percent in the current year.

Between cost of living increases, merit pay and higher state pension contributions, employee compensation is expected to increase by $1 million. New staff positions — an assistant fire marshal, a firefighter and Parks and Recreation athletics coordinator as well as part-time police apprentice and recreation assistant positions — account for another $272,000 in projected new spending.

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