Clayton council adopts FY26 budget, raises utilities and property tax rate

The Clayton Town Council adopted the fiscal year 2026 budget and a comprehensive fee schedule on unanimous votes, approving higher utility rates and a property tax rate above the revenue-neutral level.

The budget measure, passed as ordinance 2025-06-04, includes a recommended property tax rate of $0.49 per $100 valuation, noted in the presentation as 4¢ above the town's revenue neutral rate, and utility rate increases: a combined 10.2% water and sewer increase (6% water; 12.5% sewer) and a 2% electric increase. Todd, the town's finance/budget staff member, told the council that "we have big debt coming on for the Sam's branch. Debt service comes due for the first time in fiscal year 26. It's about a $10,000,000 increase in our debt service." The council approved the budget with an updated pay scale amendment included in the packet.

A separate ordinance adopting the fiscal year 2026 comprehensive list of fees (ordinance 2025-06-06) was also adopted after a public hearing. The ordinance raises various permitting and service fees across departments to better reflect current costs for materials and labor and to pursue cost recovery for services such as sidewalk repairs, driveway permits, planning reviews, and certain public-safety inspections. Todd told the council that the town had received notice of increased wholesale costs it pays for resale — water purchase increases of about 10% and electric purchase increases of about 3.5% — and the fee and rate changes reflect those pressures.

Council members framed the vote as a difficult but necessary step to preserve service levels and invest in infrastructure. One council member said the town must “plan for the future” and avoid repeated small increases next year. The town manager said the budget “strongly supports” a five-year capital improvement program and listed future priorities including two public safety centers and transportation improvements. The council noted public engagement: the administration reported more than 2,000 responses to a budget prioritization survey and that required public hearings had been held.

The council held three public hearings on the budget and fees earlier in the process and cited statutory requirements (North Carolina General Statutes) governing budget ordinances and system development fees during the discussion. No individual votes by council member were recorded in the meeting transcript; both ordinances were announced as carried by voice vote. The council set implementation and next steps during the meeting and directed staff to execute the FY26 programs and capital projects included in the adopted budget.

The council also approved an updated pay scale correction that staff described as a minor rounding adjustment and emphasized that the adopted budget reflects a conservative fiscal approach amid economic uncertainty.

The town will publish the fee schedule and updated billing notices to customers as part of the FY26 implementation.