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Perquimans' budget includes 2-cent property tax hike

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Frank Heath

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By Peter Williams
The Perquimans Weekly

Friday, June 7, 2019

HERTFORD — The Perquimans county manager’s proposed budget for next year increases the property tax rate by 2 cents as a way to reduce reliance on reserve funding to balance the county’s annual spending plan.

If adopted by the county Board of Commissioners following a public hearing on June 17, the tax rate in Perquimans’ $16 million general fund budget for 2019-20 will rise from 57 cents per $100 of value to 59 cents. It would be the first tax increase in Perquimans in almost 10 years that wasn’t directly related to revaluation of property tax values.

In the past, the county has raised the tax rate when property values have fallen. Doing so provides the county with a “revenue-neutral” budget, meaning one that raises the same amount of revenue even if the tax base’s value falls. County Manager Frank Heath’s proposed budget for 2019-20 raises the county tax rate in a non-revaluation year.

Heath explained his reason for seeking the tax hike during Monday’s commissioners meeting, cautioning them that continuing to draw down reserve funds to pay county operating expenses is not sustainable in the long run. The county earmarked $990,000 in reserve funds this year to fund expenses, and is expected to use about $732,000 of that amount.

Heath noted that even increasing the tax rate by 2 cents won’t eliminate the need to use money from reserves to balance next year’s budget. The county’s 2019-20 proposed spending plan includes $597,943 in reserves spending.

“This will leave us around 20 percent for a fund balance going into fiscal year 2020-21, which is as low as I would recommend that the board go,” Heath said in his budget message to commissioners, noting that it would “still enable the county to respond to emergency situations that may arise.”

Even if Perquimans’ property tax rate rises to 59 cents, it would still be significantly lower than the rate of its neighbors in the region. Gates County’s property tax rate, for example, is 76 cents per $100 of valuation. Camden’s rate is 74 cents, Chowan’s rate — following a one-cent increase — is 75.5 cents, and Pasquotank’s rate is 77 cents.

Perquimans’ proposed tax increase would have been much higher if Heath had funded every department and agency request at 100 percent. Heath estimated doing that would have cost another $6 million and bumped the tax rate by 47 cents.

Heath said there are signs of economic growth in Perquimans. Sales tax revenues, for example, are expected to rise by about $57,000 next year. In addition, the county is expecting more revenues from fees from building inspections, land transfers and from the Register of Deeds Office.

Combined fees from building inspections and the Register of Deeds are projected to increase by $40,000, Heath said. While not individually large income sources, they are a sign the local economy may be picking up, he said.

“The fact that these fees have increased shows that the real estate market is a little stronger, and so property tax base growth may be a little higher next year,” Heath said.

But those revenue increases couldn’t come close to funding what the Perquimans County Schools asked for in operating money this year.

The Perquimans Board of Education asked for $3.2 million in local operating money, up $378,000 from the current year. Heath recommended giving the schools $2.9 million — the same amount they received this year. He also recommended the county provide the schools the same amount — $475,000 — for capital projects next year.

The county continues to absorb most of the costs associated with providing school resource officers at all four Perquimans County schools.

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