Pasquotank, Elizabeth City votes yield 9-cent rate increases

Elizabeth City residents will see a 9-cent rate increase in their city and Pasquotank County property tax bills in the coming fiscal year.

The city and county hotly debated 2008-09 budget proposals in several meetings that began in May. They approved their budgets with split votes Monday.

The Pasquotank County Board of Commissioners went into its meeting Monday with two proposals, a 5-cent rate increase and a 6-cent rate increase. Commissioners had started negotiations with a 3-, 6- or 9-cent rate increase. They focused on the proposed 6-cent rate increase and tried to further reduce it, said Randy Keaton, county manager.

Commissioners were still divided on the best option Monday. Commissioner Marshall Stevenson said the board needed to bring spending under control.

"I feel we need to go the extra mile and not have a tax increase at all," he said.

Commissioner Matt Wood said that having no tax increase would be unrealistic and suggested the board approve the budget proposal with a 5-cent rate increase. That's what the members did, 4-3, with Stevenson and Commissioners Jimmie Harris and Jeff Dixon voting against it.

Pasquotank's new property tax rate is 55 cents per $100 valuation.

In Elizabeth City, the council voted for a 4-cent rate increase, which brings the rate to 45 cents per $100 in valuation. The city manager originally proposed a 1-cent increase but later said he could keep the same rate with a "smorgasbord" of cuts.

A week later, the council voted for increasing the rate to avoid losing sales tax revenue as a result of Pasquotank County's plan to raise its rate.

Over the years, the council's reluctance to raise tax rates has worked against it when it came time to split sales tax revenue with Pasquotank County, City Manager Rich Olson said.

The way the reimbursement is calculated, the city lost money when the county raised its tax rates and the city did not.

According to an e-mail from the county manager, the city and county send their respective tax levy information to the North Carolina Department of Revenue each year. The levy then is used to determine the sales tax distribution for the following fiscal year.

For example, in the coming fiscal year, set to begin July 1, the sales tax distribution formula is based on the property tax rates the two governments set last year, when Elizabeth City raised its tax rate 1 cent and Pasquotank County raised its rate 2 cents. Because the two governments' increases were proportionate, there is no revenue loss for the coming year.

But if the city did not raise its property tax rate in relation to Pasquotank County's 5-cent rate increase for the coming fiscal year, the city could lose $200,000 in sales tax revenue the following year.

Elizabeth City's additional tax revenue will be used for things such as police equipment recommended by the mayor's crime task force.

The city budget was approved 6-2, with Anita Hummer and Kirk Rivers voting against it.

Meanwhile, rates in Perquimans County will drop as a result of revaluation. While the county's 41 cents per $100 valuation will be among the lowest in the state, Hertford residents will pay the town 35 cents per $100 valuation to cover higher costs for fuel, employee salaries and contract expenses.

The Edenton town council fought a recommended

3-cent property tax rate increase by making cuts. The council approved a budget that kept the tax rate at 29 cents per $100 valuation.

Chowan County kept its rate at 56 cents per $100 of assessed property value.

Lauren King, (252) 338-2413, lauren.king@pilotonline.com