Finance director explains revenue-neutral tax-rate calculation after Orange County revaluation

The finance director told the Mebane City Council that 2025 is a revaluation year for Orange County and explained how the Local Government Commission spreadsheet is used to compute the revenue-neutral tax rate that must be included in the budget ordinance.

"The revenue neutral tax rate to be included in the budget ordinance adjusted for growth is actually calculated down here," the finance director said, pointing to the LGC-calculated number and stating the adjusted revenue-neutral rate in the draft was 0.4039. Council members pressed for clarity because, intuitively, a growing tax base would suggest a lower rate to keep levy revenues constant. The finance director explained the difference: state statute requires the revenue-neutral calculation to include an average growth adjustment, which can make the statutory “revenue-neutral” figure higher than the current rate in some circumstances.

The finance director also noted Mebane spans two counties (Alamance and Orange), which affects revaluation timing: because revaluations in the two counties are out of phase, the city’s growth calculations do not average multiple years in the same way a single-county jurisdiction would. Council members asked about specific growth figures; the finance director said the city-wide growth figure used in the statutory adjustment was about 13.4% for the relevant period, and that the Orange County revaluation contributed roughly a 4% increase to the city’s revenue projection when combined with Alamance County and new construction assumptions.

Staff clarified that the FY26 budget presented by staff was built on a 0.37 tax rate and that the LGC-adjusted revenue-neutral number will still appear in the budget ordinance because the statute requires it. No formal action was taken at the work session; staff said the statutory disclosures and the recommended budget will be finalized before the ordinance is presented for adoption.