Raleigh '08-'09 budget approved with 4.18-cent tax-rate hike

Raleigh, N.C. — The city council Monday approved a budget of nearly $643 million that will bump the property tax rate by 4.18 cents.

In a 5-2 vote late in the afternoon, the council approved the plan that will put the 2008-09 tax rate at 37.35 cents per $100 of taxable value.The city manager's proposed budget would have raised the rate 5 cents.

"The FY09 budget contains $4.7 million of new investment for staff and equipment. Of this, $3.2 million is additional funding for public safety," a city spokeswoman said in reporting the decision. That includes 12 new police officer positions, a 5 percent raise in starting salaries for police and firefighters, six new 911 call-taker slots and a new fire station.

The budget also will put money toward a new fire and police headquarters and to work on parks. Fuel for vehicles is taking a bigger slice of the pie, too. Some road projects will be put on hold.

At the same time costs are rising, a slowing economy is reducing revenues, including sales taxes.

"Really, this is a year that we should have exhibited great restraint, versus increasing the budget as much as we did," Councilman Philip Isley said.

"You can always say wait, do it some other time. Frankly, there never is a good time to do these projects, and the best time is to go ahead now before they become even more expensive," Mayor Charles Meeker said.

The tax rate, which the city said is "among the very lowest" municipal tax rates in the state, is actually lower than the figure taxpayers saw on their bills for 2007-08. Wake County revalued property at the end of 2007, however, and that changed the calculus for talking about tax rates.

If the council had not changed anything from its last budget, the revaluation would have resulted in an even lower tax rate this time around – 33.17 cents. That is the number officials used in calculating the increase approved Monday.

A tax bill is the result of the tax rate multiplied by the assessed value. While one number is lower than last year, values are, on average, 38 percent higher, and the final number will, on average, be higher. What happens for each property depends on how its value changed in the reassessment. City officials estimate the fiscal 2009 budget will mean an $80 tax-bill increase on a $200,000 home.

The council also voted to raise water and sewer rates 15 percent, which the city said works out to $4.86 more a month for an average residential account. The budget also will move the city to a tiered rate system no later than mid-2009, a change that will charge more money as customers use more water.