Oh, What a Crying Shame

Between the expected $450K loss in revenue due to the Blue Ridge Loophole* and the millions needed for Chantal recovery costs, Carrboro is facing a tough budget year.

The Manager’s recommended budget contains:

• cuts to most departmental budgets,

• a freeze on hiring,

• plan to use fund balance (similar to a savings account) to cover Chantal recovery expenses and some recurring costs (probably salaries); and

• against town tradition, a plan to borrow the funds (debt financing) for several capital improvement projects.

The immediate pain from this situation is being felt by the non-profit human service agencies that have depended on the town for years to help fund their work. In FY2026, 39 agencies, with a special focus on hunger relief programs, received $458,000 which was $237,000 less than the agencies requested. This year’s recommended budget reduces the pot by an additional 45% to $260,407. Money can be transferred from the Affordable Housing Special Revenue Fund into the Human Services budget, but that would still leave a deficit of over $200,000.

Of all the challenges facing the town this budget season, the cut to the nonprofit agencies was the only one that drew any pushback/concern from the Town Council in their discussion after Tuesday night’s public hearing closed. The Mayor and all but one of the council members expressed concern about the consequences of this cut. Among the six (6) active in the discussion, there was more disagreement on how to proceed than I have seen since Randee Haven-O’Donnell retired in December.

Although the Manager’s recommended budget did not include a tax increase, some Council members felt like the community would accept a ½ cent tax increase to maintain the human services budget equal to last year’s allocation. Others, including the Mayor, dug in their heels with an adamant ‘no tax increase.’

Limited Options

Address this human services funding reduction is a critical community discussion. Do we let our most vulnerable residents go un- or under-served or push yet another tax increase onto property owners? There is no revenue available other than a tax increase and most town services have already been cut to the core. I heard one suggestion to postpone the pickleball courts. But delaying CIP projects like the pickleball courts doesn’t save anything since those are restricted funds (can only be used for designated projects).

Here are a few options, but none of them are easy to swallow.

• Increase, yet again, the property tax rate.

• Budgets in Information technology and the Police Department were both increased. Those could be cut unless the increases are for personnel that have already been hired.

• Reduce or eliminate the 2.5% cost of living (COLA) salary increase for town staff.

• Reduce the number of agencies receiving Human Services funds and/or lower previous allocations.

• Draw even more than the already planned $2.76M from the fund balance.

What can you do?

This won’t be our last year to face tough budget decisions. We need to impress upon the Town Manager, Mayor, and Town Council members the community priority to implement participatory budgeting well in advance of the required public hearings on the budget.

For now, here are a few actions you can take today. Please send your emails to council@carrboronc.gov in advance of the June 2 Council meeting.

• Ask Council to delay their scheduled budget adoption vote on June 2 to give the community more time to be creative in finding $215,000 to solve this problem. State statute requires the town to adopt a balanced budget before the new fiscal year begins on July 1. The vote could be delayed for 1-2 weeks. It’s been done before.

• Voice your opinion on another property tax increase.

• Advocate for your preference of either finding more cuts or fully funding the Human Services budget.

• Comb through the budget to find places where you believe the budget could be cut. This is your town–your opinion matters! That’s what participatory budgeting is all about.

In the long run, the town must invest more in economic development. The town cannot continue to be so totally dependent on property taxes for the bulk of its revenue. Past budget decisions are coming home to roost and the federal and state legislatures are toppling long standing budget practices. This won’t be our last year to face tough budget decisions.

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As you can see from this table, the agency requests for FY2026 exceeded the funds available. This proposed cut for FY2027 will cut this funding source by 45%. 43 agencies applied in FY2026, 39 were funded. Which ones would you de-fund for FY2027?

*The Blue Ridge Loophole was created in 2013 through a court case in Mitchell County. It allowed for-profit apartment complex owners to claim a generous tax exemption in exchange for handing over a very small percentage of ownership of the complex to a nonprofit housing developer. Carrboro has taken the biggest hit within Orange County losing $83M in its property tax base which translates to an expected $463,000 loss in property tax revenue.