Several Spring Lake residents expressed concerns about rising property tax bills during the public comment portion of the board of commissioners meeting on Monday night.
Residents of the Woodland West neighborhood in Spring Lake showed up en masse to Monday’s meeting, explaining that their bills are significantly higher than those they received just a year ago. One resident stated that they saw their property tax costs rise from around $1,100 last year to nearly $1,900 in the most recent term.
There are several factors that have driven up the cost of property taxes in Spring Lake. Let’s break it down.
County-wide revaluation
Earlier this year, properties across Cumberland County underwent a revaluation, a process where all properties within the county are assessed and appraised to determine any changes in value since the previous revaluation process. This assessment is done to ensure that property reflects the current market value, or what would reasonably be paid for the property, and ensure that all property owners are paying an equitable share in taxes.
In North Carolina, counties are required to perform this process at least once in an eight-year period, which is the current schedule Cumberland County operates within. The last property revaluation was in January 2017, according to the Cumberland County property tax revaluation website.
Town Manager Jon Rorie explained that because property values are assessed so infrequently, the increases that residents see in their property tax assessments look more drastic than if revaluations were done annually.
“Everybody that’s here in Spring Lake experienced roughly a 60% increase in their property values,” Rorie said.
These property value increases have been felt across the county. Spring Lake Mayor Kia Anthony explained that several factors, including a post-COVID market boom, contributed to the rising property values and subsequent rising tax rates. She said that after COVID, the housing market in Spring Lake “increased tremendously.”
“It’s a double-edged sword,” Anthony said. “While you’re getting the property value increase in your equity, you’re also paying more in property taxes.”
Tax collection changes
Another factor affecting tax hikes in Spring Lake is that the county recently changed how it collects sales tax from municipalities.
In April, commissioners voted unanimously to approve an agreement with Cumberland County that changed sales tax collection to an ad valorem model, where the rate is based on property values in the municipality. Previously, sales tax was collected based on a per capita model, based on the population of Spring Lake.
Town Manager Jon Rorie explained to residents at Monday’s meeting that this change — which has been a 20-year effort for Cumberland County — had a major impact on the financial standing of the town’s general fund.
Rorie said in the per capita model Spring Lake accounted for about 2% of Cumberland County’s population, which meant that the town was able to keep a higher portion of the sales tax they collected for the town’s general fund, to be used to make improvements around town. In the new ad valorem model, Spring Lake only makes up about 1% of the county’s property values, significantly dropping the amount of sales tax they are able to keep.
This drop in sales tax revenue for the town drove a $1.7 million deficit in the town’s budget.
In April, CityView reported that Spring Lake and Cumberland County reached an agreement that the town could retain 50% of any revenue collected beyond their 2022 tax collection rate, but with a projected total revenue of around $690,000, only about $347,000 would be retained by the town.
Even with this agreement in place, Spring Lake had to make up the difference between the revenue it brings in from taxes and the deficit the town faced due to collection changes.
Anthony said that these changes are a key reason that Spring Lake residents didn’t see a decrease in property taxes that are assessed by the town. The town’s current property tax rate is $0.74 per $100 in value, the highest municipal tax rate in Cumberland County. She said the rate is necessary for the town to continue to operate at its current level.
“In order for us to continue providing services to the town, we could not decrease the amount of money we were bringing in,” Anthony said.
The next Spring Lake Board of Commissioners meeting will be held at 6 p.m. on Monday, Aug. 8 at Spring Lake Town Hall, 300 Ruth St.
