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Back You are here: Home News Local and State News Local County Offers Guide For Taxpayer’s On Revaluation and Property Taxes

County Offers Guide For Taxpayer’s On Revaluation and Property Taxes

By WILLARD KILLOUGH III
Managing Editor

NEW HANOVER CTY -  As New Hanover County and municipalities plan for the upcoming 2012-2013 fiscal year budget, the issue of maintaining a revenue neutral property tax rate is a hot topic.
Earlier this week the County tax department released a guide to better explain the revenue neutral concept to taxpayers who are wondering how much they might end up paying in property taxes later this year.
According to the tax department historically, under normal economic conditions, the tax base increases during revaluation. For the first time they are seeing North Carolina counties experiencing decreases in their tax base after revaluation.
This year’s revaluation has caused the total value of the property to be taxed within the County to decrease from $34 billion to $29 billion.  You may believe this will ensure you have a lower tax bill this year, but there are additional factors to consider before you make that assumption.
The first factor to consider is the value of your property in comparison to the prior assessed value.  Not all residents within the County experienced the same percentage change in value.  Further, not all County residents experienced a decrease in value.
Example:
Taxpayer A owned a New Hanover County residence that was valued at $100,000.  After the revaluation, Taxpayer A’s residence has a new value of $50,000.  Taxpayer B owned a home in New Hanover County that was valued at $100,000.  After the revaluation, Taxpayer B’s home has a new value of $90,000.
If the tax rate were to remain the same after the revaluation, Taxpayer A’s tax bill would drop from $465.50 to $232.75 while Taxpayer B’s tax bill would drop from $465.50 to $418.95.
Both properties decreased in value at different percentages, so given a constant tax rate, their tax bills will also decrease at different percentages.   
The next factor to consider is the tax rate that the County must set to cover its expenditures for the year.  Since this tax comprises over half of the County’s total revenues, the rate must be adjusted after a revaluation to ensure all necessary expenditures are still paid.  These expenditures provide services such as protecting the citizens of the County through the Sheriff’s office and 911 communications,  supporting the public education system, and improving quality of life through health and human services.  The County is proposing a revenue-neutral tax rate, which means the property tax rate is adjusted to produce substantially the same revenues as the previous year.  In simple terms, the County still requires the same amount of money to operate, so if property values drop, rates must be raised to provide the same level of services.  The revenue-neutral tax rate for New Hanover County is .554 per $100 of value.
Example:
Taxpayer A owned a New Hanover County residence that was valued at $100,000.  After the revaluation, Taxpayer A’s residence has a new value of $50,000.  Taxpayer B owned a home in New Hanover County that was valued at $100,000.  After the revaluation, Taxpayer B’s home has a new value of $90,000.
If the revenue-neutral tax rate were used, Taxpayer A’s tax bill would drop from $465.50 to $277.00 while Taxpayer B’s tax bill would increase from $465.50 to $498.60.  Essentially, Taxpayer B’s value did not drop enough to compensate for the increase in the overall County tax rate increase.      
As shown in the above examples, each taxpayer will be affected differently with the new property values and the new tax rate set by the County.  Everyone must assess their situation based on their own circumstances and set of facts.  On average, the estimated value of property within the County decreased approximately 15%.  Property owners whose values decreased greater, such as in Carolina Beach, than the average will see a reduction in their property tax bill while property owners whose values decreased less than the average will see an increase in their property tax bill.
New Hanover County, the City of Wilmington and the three beach Town's must adopt a balanced budget by June 30th that includes setting their property tax rates.
On Tuesday May 8, Carolina Beach Town Councilman Steve Shuttleworth said the Council held a public hearing on a proposed budget, but were not entirely comfortable with the tax rate. He said another budget meeting will be scheduled. They want to come in under the revenue neutral rate.
The City of Wilmington is considering an increase above the revenue neutral rate of some 8-cent to cover a rising cost of doing business. Some say it's also a plan to use taxpayers’ dollars to fund a new baseball stadium. A hotly debated topic.