County leaders are discussing how to adjust next year's tax rate after a property revaluation that's estimated to trim $17.5 million in tax revenue from the county's $203 million annual budget.
Brent Weisner, a county tax administrator for almost nine years, has been involved with revaluations for 35 years. Out of the 18 revaluations he's been a part of, he's never seen a decline in revenue this drastic.
"It's never happened that I'm aware of," said Weisner. "I've never been directly involved with revaluations that have declined. They're done every four years, and value shifts are rarely this dramatic."
Cabarrus last reset property values in 2008, before the region experienced major declines in home prices and sales. The size of the county's total tax base is expected to shrink by about 8.6 percent under the new revaluation, according to the Cabarrus County Assessor's Office. Revaluation notices will be mailed the week of Feb. 20.
Larry Burrage, vice chairman of the Cabarrus County Board of Commissioners, said the board is discussing how to handle the decrease, but a decision is still months away. Cutting services and increasing the tax rate are likely outcomes, he said.
"We don't have a whole lot of control over a whole lot of money when it comes to our budget," he said. "If Washington and Raleigh send mandates down, then we don't have much of a choice.
"I think there's going to have to be some sort of increase; I just don't know what it's going to be. Even with cutting the budget, I don't see any way of making it without a tax increase."
County finance officials expect the decline in property values to raise about $17.5 million less in property taxes under the current tax rate of 63 cents per $100 valuation. The current rate yields a $1,260 tax bill on a $200,000 home.
Officials expect single-family homes to decrease in value by about 13 percent, causing the revenue-neutral tax rate - the tax rate that would raise the same amount of revenue on the same tax base as the previous year - to rise to nearly 73 cents per $100. That rate would yield a $1,460 tax bill on a $200,000 home.
When properties are revalued, counties and municipalities are required by state law to calculate a revenue-neutral tax rate.
If the property value of a $200,000 home went down 15 percent, the tax bill would be $20 less. If the property value went down 20 percent, it would be $93 less. A 5 percent decrease would add $126. A 10 percent increase in value would add $345.
Budget recommendations will be presented by May 30 and adopted by June 30. Residents can appeal.
Cabarrus County Manager Mike Downs said the budget process is in full swing, and department heads are scrutinizing their budgets, knowing there's a potential loss of revenue.
"This kind of shortfall is very rare in our area, as we've experienced growth for so many years," said Downs. "It's going to be tough, and the board is going to have make some pretty tough decisions.
"But it's all going to come back to, as we move forward, what is the accepted level of service from the board's perspective and public's perspective."
Assessed value of the property, cost of local government services and the tax rate - set by county and municipal elected officials to meet the cost of services - determine how much property tax each property owner must pay.
How much the new assessment will affect your tax bill cannot be determined until operating budgets are adopted and all local governing bodies have set their tax rates.
It's the job of department heads to plan to deliver the same level of service as in the previous year.
"We are going to scrutinize our current budgets and continue to search for additional ways to save money for the future and still provide the same level of services expected by the public," said Downs. "But there's going to be a gap. Right now, it's about $17.5 million.
"Typically, values go up, so if we leave the tax rate where it is, you realize additional funds. This time we're expecting the revenues to go down, so if you keep the existing tax rate, revenue is going to be less."