Property tax rates will go down, but property tax bills will go up
Yes, your property tax rate is going down, but no, your property tax bill probably bill isn’t. Wait, what?
That’s right, in what’s been perhaps the strangest two-year financial period in Haywood County history, a countywide property revaluation earlier this year revealed ascending property values across the county, some on the order of 20 to 30 percent.
This comes after most municipalities adopted austerity budgets last year, in the face of uncertainty over the economic effects of the Coronavirus Pandemic that unfolded during the last budget season.
“From a budgeting perspective, 2021-22 is one of the most unusual financial environments that budget teams statewide have encountered in their careers,” said Waynesville Town Manager Rob Hites in his annual budget message. “Within the time period of twelve months, municipalities have moved from an extremely pessimistic financial outlook to one that is far more positive.”
Property tax bills are calculated by multiplying the property’s value by the tax rate, expressed in cents per $100 in assessed value.
All things being equal, the increase in property values would normally generate much, much more revenue for local governments, leaving elected officials with several choices: keep the tax rate the same and utilize the windfall, lower the rate to a revenue-neutral figure based on existing needs, or split the difference with taxpayers.
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Governing boards in Canton, Haywood County and Waynesville have all opted for the latter option.
Canton
The town of Canton’s tax rate has been the highest among Haywood County municipalities for quite some time now, but it hasn’t changed since 2007, giving taxpayers a small consolation — although inflation has undercut some of the town’s spending power over that time, there hasn’t been a tax increase in 14 years.
This year, the proposed rate will drop from 58 to 54 cents.
“I feel really enthusiastic about this budget,” said Canton Mayor Zeb Smathers. “It’s tight where it needs to be, but we’re planning for the future. The budget not only lays out this year, but larger projects in coming years. Here in Canton, we’re not standing still.”
Smathers said that long-term strategy goes heavy on recreation, especially with major work coming to Sorrells Park and the new Chestnut Mountain Park, but he’s not about to overlook critical infrastructure improvements, like with the town’s water system, that would open up further economic development opportunities.
And just like in other municipalities, Canton will place a renewed emphasis on employee compensation; pressure from the booming Asheville metro area has driven up salaries in Buncombe County, so local governments in Haywood County often lose experienced employees.
“I think we’re losing money long-term with turnover,” Smathers said.
Last year, a $100,000 property in Canton would have a tax bill of $580. With this year’s rate cut, that would normally drop to $540, however, if that $100,000 property saw a 20 percent increase in value to $120,000, this year’s tax bill would be $648.
Haywood County
Almost 20 years ago, Haywood County’s property tax rate was an astounding 61 cents. That dropped to 49.7 cents in 2006, but as the Great Recession settled in, the rate jumped to 51.4 cents in 2009 and has slowly crept up since then to 58.5 cents.
Two slightly different forecasts put this year’s revenue-neutral rate at about 50.7 cents, meaning the county could raise roughly the same amount of money as last year with that rate, because of the jump in property values.
Commissioners opted to go with a rate of 53.5 cents this year , which will bring in an additional $2.4 million in revenue. However, according to County Manager Bryant Morehead, commissioners have opted to spend the bulk of that — $2.337 million — on bringing employee salaries up to market rates, to increase employee retention.
But that doesn’t quite tell the whole story; declining investment earnings due to low interest rates cost the county about $550,000. However, another unanticipated consequence of the Coronavirus Pandemic has resulted in skyrocketing sales tax figures for most Western North Carolina counties, which means even more revenue.
“Even though I had lots of experience in budget and finance, I had no experience in a pandemic,” Morehead said. “I couldn’t believe how the sales tax performed last year.”
Morehead said that the county realized a 16 percent increase, and that he’s been tasked by commissioners to put a priority on facilities maintenance, keeping the county’s property in better shape so it doesn’t need to be repaired as often.
Last year, a $100,000 property in Haywood County would have a tax bill of $585. With this year’s rate cut, that would normally drop to $535. However, if that $100,000 property saw a 20 percent increase in value to $120,000, this year’s tax bill would be $642.
Waynesville
The property revaluation was especially kind to Waynesville. Last time, the town experienced a 1.59 percent decrease in taxable value, but this time, the residential tax base is up 25 percent, with commercial property showing a 15 percent increase.
As with Haywood County, the Town of Waynesville experienced increases in sales tax, in addition to the property valuation increases. That’s good news for town employees.
“The increases in the property tax base and increase in sales taxes provides the Town with sufficient revenue to fund a pay plan that takes an important step in placing the Town’s salaries in line with its competing municipalities,” reads Waynesville’s budget summary .
The pay study looked at eight local governments and determined that Waynesville’s entry level salaries were near average. The new budget will bring the town’s salaries closer to competing with local governments, which will help with employee retention. All in all, the increases will run about $800,000 across town departments, including employees who are paid through the water, wastewater and electric departments.
Last year, a $100,000 property in Waynesville would have a tax bill of $496. With this year’s rate cut, that would normally drop to $455. However, if that $100,000 property saw a 20 percent increase in value to $120,000, this year’s tax bill would be $545.
Budget breakdown
Haywood County
• Current 58.5*
• Proposed 53.5
• Revenue neutral 50.69-50.78
• Public hearing June 1 (vote possible on June 7)
Waynesville
• Current 49.57
• Proposed 45.45
• Revenue neutral 41.27
• Public hearing June 8
Canton
• Current 58
• Proposed 54
• Revenue neutral 50
• Public hearing June 10
*Tax rates are expressed as cents per $100 in assessed property value. Sources: Town of Canton, Haywood County, Town of Waynesville.
