Nags Head board signals inclusion of 23.2-cent tax rate in budget, directs half-cent to beach nourishment

At a May 21, 2025 budget workshop, Nags Head Town staff presented options to address an expected drop in shared revenues and commissioners signaled consensus to include a 23.2-cent tax rate in the recommended FY26 budget, dedicating 0.5 cent to the townwide beach nourishment rate and using the remainder to reduce a planned fund-balance appropriation.

Town staff reported a 59% increase in assessed property values after a county revaluation, bringing the town’s total assessed value above $5 billion, and said the revenue-neutral rate calculates to about 20.87 cents. The recommended budget published earlier carried a 22-cent rate; staff said recent proposed levy increases in neighboring towns will reduce the town’s share of countywide occupancy, sales and land-transfer taxes next year.

“We now expect to lose about $420,000 in shared revenue because of the substantial tax increases from the other towns,” Andy, the presenter, said, describing how the distribution formula and a one-year lag in changes will affect the town’s FY27 receipts.

Staff outlined options: moving a planned 1-cent increase from FY27 into FY26 would raise this year’s increase from 1.13 cents to 2.13 cents and reduce the projected shared-revenue loss to about $100,000; a larger option to fully preserve the financial plan would equal roughly a 2.33-cent increase. Commissioners discussed those choices and their trade-offs.

Commissioners agreed to include a 23.2-cent rate in the recommended budget document, with a plan to dedicate a half-cent to beach nourishment (bringing the townwide nourishment rate from 1.5 cents to 2 cents) and apply the remainder to lower the $400,000 fund-balance appropriation. Staff estimated the half-cent for beach nourishment would generate roughly $250,000 and that the proposed changes would largely restore the shared-revenue projection in the town’s financial plan.

Amy, who addressed the fund-balance line item, clarified the mechanics: “Whatever you appropriate for the next fiscal year comes off of your fund balance for fiscal year 25 books,” and noted that keeping the appropriation at $400,000 would not change the fund balance but reducing it would return that amount to reserves.

Commissioners voiced concern that not acting could force larger tax increases later or risk reversing progress on multi-year projects such as stormwater and water-line replacement. One commissioner referenced earlier strides on stormwater, urging caution about falling behind.

The workshop is advisory: the board will formally consider and vote on the budget and any tax-rate adoption at upcoming public meetings, with the public hearing scheduled for June 11, 2025.