Town leaders throughout southern Mecklenburg County will face uncertainty next month as they begin crafting their 2015-2016 budgets.
The new budgets won’t go into effect until July 1, but the budgeting process takes several months and includes extra board meetings and a public hearing before town councils can vote.
Revenues will be affected by a recent property tax revaluation, the loss of the business-privilege-license tax, possible sales-tax redistribution and other fund reductions by the state legislature; however, actual numbers are hard to pin down.
All these aspects mean town managers and elected officials must deal with shifting and incomplete data as they estimate 2016 revenue.
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Meanwhile, towns still are issuing refunds to taxpayers whose property has been revalued at a lower price, and that revaluation also is cutting into the tax base for future property-tax revenue.
Division Director Eric Anderson of the Mecklenburg County Assessor’s Office said that, based on current information, the assessed property-tax values went down approximately 2 percent in Pineville and Matthews and 3 percent in Mint Hill.
Those percentages do not include new development and construction, since that will be added to the 2015 tax base.
Anderson said the countywide revaluation, required by a state law passed in 2013, is complete, but the Mecklenburg County Board of Equalization and Review continues to hear appeals from property owners. Anderson said the goal is to have that process concluded by the end of 2015.
Matthews Town Manager Hazen Blodgett said his town will face a tight budget year. Though the value of the property in town dropped 2 percent with the revaluation, Blodgett said, development since has mitigated most of that decline.
“The county is projecting our property tax evaluation to go down by $11,500,000, or .3 percent of the current value, in 2014. The estimate that we are getting from the county is that the total amount of refund that the town of Matthews is responsible for to our residents is $975,000,” Blodgett said.
“We think, based on our current budget, that we will be OK. The refunds will come out of our fund balance, or savings.
“The tough part will be trying to rebuild our fund balance after taking a $1 million hit,” Blodgett said.
He estimated that, due to the .3 percent decrease, Matthews will receive $35,000 less in property-tax revenue next year. It also will lose $185,000 in business-privilege-license tax.
Pineville Town Manager Haynes Brigman said the tax base in Pineville, compared to the property-tax base in 2011, has gone down by 2 percent. He said growth in the town has not overcome that reduction.
Brigman said that last fiscal year, Pineville issued $457,000 in town tax refunds to residents whose property value had dropped as a result of the revaluation. Already this fiscal year, Pineville has issued $209,000 in property-tax refunds, he said.
Pineville also will lose $654,000 in business-privilege-license tax, as the general assembly has prohibited that tax beginning next budget year.
“It’s put pressure on us since the refunds started,” Brigman said. “One of the biggest impacts is the unknown. We don’t know when it will all be concluded. There’s a strain on resources and staff in issuing refunds and projecting what the impact of the revaluations will be to our revenues in the future.”
Mint Hill Town Manager Brian Welch said that, while the property value dropped 3 percent because of the revaluation, residential and commercial construction has more than made up for the loss.
“We’ve added homes and commercial development every single year, so I think we will actually see a net gain,” Welch said. “We run a pretty lean budget concentrating on health, safety and welfare, so I don’t think this budget year will be any tougher than last.”
Also, if the N.C. legislature approves a proposed sales-tax redistribution plan, Welch said, it would affect the town, but ending the business-privilege-license tax does not affect Mint Hill, since the town does not issue business licenses.
Welch said the town already has paid $200,000 in property-tax refunds due to the revaluation and estimates the total will end up being around $700,000.
Since that money will be paid out over several years, Welch said, the budget should be able to absorb it.
Melinda Johnston is a freelance writer. Have a story idea for Melinda? Email her at firstname.lastname@example.org.