The property tax rate would decrease substantially under City Manager Doug Hewett’s recommended budget for the City of Fayetteville for fiscal year 2025-2026, which he presented at Monday’s Fayetteville City Council meeting.
The budget recommends a property tax rate of 44.95 cents per $100 of assessed value, representing a 13-cent decrease from last year. The $312.5 million budget represents a 2.64% decrease from last year’s $321 million budget. It also recommends a slight decrease to the Central Business Tax District rate, applied only to property owners of downtown businesses, from $0.17 last year to about $0.15 this year.
Stormwater and solid waste fees would remain the same, as would bus fares. The residential stormwater fee is currently $84 per year, the solid waste fee is $275 per year, and the bus fare for one trip is $1.25 for an adult passenger.
The recommended budget also includes:
- $4.6 million in compensation increases for city employees
- $6.3 million for street and stormwater projects
- $3.1 million in new investments, including $1.1 million for construction management service improvements
- $71.7 million for the police department
- $39.7 million for the fire department
Although the 13-cent property tax decrease could bring some relief to Fayetteville property owners, it could also be offset by the latest property revaluation, in which residents across the county saw their home values skyrocket.
The budget also accounts for the change to the county’s sales tax distribution. Starting July 1, sales taxes generated by the county will be distributed to municipalities based on an ad valorem method as opposed to the per capita method, which allocates taxes to municipalities based on property value as opposed to population. City managers said this means Fayetteville will see a decrease in sales tax revenue by about 20%, or about $14 million.
However, this lost revenue will be partly made up for by the fact that Fayetteville will not have to appropriate $9.7 million to pay the county for annexation costs anymore. The city previously paid the county for expenses incurred when it annexed land from the county, but those payments conclude in fiscal year 2025-2026, Hewett said. Fayetteville is also expected to receive between $2.5 million and $3 million in additional sales tax revenue under a one-year revenue sharing agreement with the county to ease the transition from per capita to ad valorem.
“These budgets that we have put together the last couple of years have been increasingly challenging,” Hewett said. “This year’s budget has also proved to be equally so because partly because of the revaluation, which has given the city additional financial resources, but it also signals the end of the sales tax and annexation agreements that we had with Cumberland County.”
Aside from real property tax, or taxes paid on buildings and land, there are also taxes on personal or business property, motor vehicles and public service property, Assistant City Manager Jeffrey Yates said. He said the 13-cent decrease would lower the rate for those other categories, especially the motor vehicle tax, or the tax a resident pays on their car when it is registered.
“The 13-cent reduction recommended in your tax rate reduces the tax impact on those other three categories because they are not set based on reval,” Yates said. “They’re set by the Machinery Act as a declining schedule, a declining depreciation schedule.”
The recommended budget will likely go through several changes and iterations before being approved by the council in June and going into effect on July 1. Budget work sessions are scheduled for May 15, May 22, May 29 and June 2. A public hearing on the budget is set for May 27, with a possible adoption on June 9.
Government accountability reporter Evey Weisblat can be reached at eweisblat@cityviewnc.com or 216-527-3608.
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