Morehead City adopts $42.1 million budget after 3–2 vote; manager directed to seek tax reductions

Morehead City — The Morehead City Council on June 9 adopted the fiscal year 2026–27 budget totaling about $42.1 million, approving an ordinance and related amendments after a 3–2 vote. Councilmembers Richard Abell, Bill Taylor and Harvey Walker voted in favor; Mayor Pro Tem George Ballou and Councilmember Nathan Chambers voted against.

City Manager Randy Martin and finance staff presented the proposal as a strategic, balanced plan that holds the property tax rate at the proposed 0.3425 (34.25 cents per $100 of assessed value), includes a five‑year capital improvement program, and maintains current service levels while cutting departmental requests by roughly $8.5 million. The package calls for a 5% increase in water and sewer rates and retains the monthly solid‑waste charge at $24.50.

“Combined, these documents provide a comprehensive financial roadmap for Morehead City,” Martin told the council, framing the budget as a stewardship document and saying staff would perform a “comprehensive physical, fiscal assessment or reset effort” to evaluate service levels and long‑term costs.

The public hearing drew residents who urged tax relief. James H. Walker Jr., a Morehead City resident, urged a lower tax rate based on recent property revaluations. “My recommendation would be … 24 cents per hundred,” Walker said. Joe Giallo pressed for clearer accounting of where new revenue would be spent: “I really haven't heard much in the way of explanation, much less a compelling justification,” he said.

Council debate focused on whether to reduce the proposed rate immediately. Finance staff described narrow options to reduce the rate to 0.34 (34 cents) this year through modest service‑level adjustments and a one‑time draw on fund balance — measures that staff estimated would lower revenue by tens of thousands of dollars. Some council members argued for waiting while the new city manager conducts a deeper review; others pushed to act now to give residents tax relief.

After adopting the budget and associated fee schedule and amendments (ordinance numbers 2026‑13.1, 2026‑13.2 and 2026‑13.3), the council unanimously approved a separate directive asking City Manager Martin and finance staff to analyze expenditures and revenues and present a reset plan by Dec. 31 to identify sustainable opportunities to lower the tax rate.

What changed: The council approved the manager’s budget as presented but also formally tasked the manager to return with options to reduce the tax burden during the next budgeting cycle. The budget ordinance takes effect as adopted; any tax‑rate change for FY 2026–27 would require subsequent council action.

Next steps: City Manager Randy Martin will report back to council with the requested analysis and recommendations by Dec. 31, 2026; the findings will inform the FY 2027–28 budget process.

Vote: Budget ordinance and amendments adopted 3–2 (Abell, Taylor, Walker — yes; Ballou, Chambers — no).