New Hanover County commissioners debate using reserves or raising property taxes to close FY2027 gap

New Hanover County commissioners spent a meeting-length discussion weighing two staff-drawn FY2027 budget models, one that keeps the county’s property tax rate at 30.6¢ and relies on the revenue stabilization fund (RSF) to pay new priorities, and one that balances those priorities by increasing the property tax rate.

Amanda, a county staff presenter, told the board staff had prepared two scenarios and that the RSF-funded model includes $2,000,000 for workforce housing, a $900,000 restoration of pre-K funding (bringing pre-K to $1,900,000 total), a $300,000 annual contribution to the Center for Community Justice and a pooled allocation for arts and culture, which together increase identified board priorities by about $4.7 million. "Our first scenario is, leaving the tax rate at what it is, 30.6," Amanda said.

County manager Chris cautioned how Amanda described the change, saying: "The budget is balanced. We haven't created a gap. We added funding from what we heard." Chris told commissioners the models reflect board direction from an April 1 work session and that the superintendent of schools has not formally transmitted a pre-K ask to the county; staff included the pre-K restoration based on the board discussion, not a school-system request.

Staff noted the RSF scenario leaves an identified $5.2 million to be paid from the revenue stabilization fund to maintain the 30.6¢ rate; the tax-increase scenario pulls one-time monies out of the base and shows an $11 million shortfall that would be addressed by raising the property tax rate. To help deliberations, staff displayed a tax-impact calculator showing the county’s average home value ($580,000) would pay about $1,700 annually at 30.6¢ and about $1,890 at a 2¢ increase.

Commissioners split on how to proceed. Several argued the RSF exists for exactly this sort of economic downturn and urged its use to fund school contributions, preschool restoration and workforce-housing dollars in the short term. Others warned that repeated withdrawals from RSF are like borrowing against future interest earnings and said it would be more prudent to "right-size" the tax rate now to avoid returning to reserves repeatedly.

At the end of the discussion the chair directed staff to prepare two or three budget options that do not use the revenue stabilization fund, saying she did not hear a fourth vote in favor of RSF use and preferring the board take a deliberate majority decision before tapping the fund. Chris agreed staff would bring options for commissioner negotiation.

Next steps: staff will return multiple no-RSF options and tax-increase scenarios for the board to consider prior to final adoption.