The Chatham County Budget: Where Does The Money Come From?
Deep dive: Chatham County by the numbers (Part 3)
by Casey Mann, Senior Correspondent
Parts 1 and 2 available online at ChathamCountyLine.org
The Chatham County Line has taken a deep dive into the inner workings of Chatham County’s budget, providing an overview of the budget and budget making process, and dove into property taxes in Chatham County. The current Chatham County budget, excluding utility funds, is a little over $132 million, a majority of which —nearly $80 million —comes from property taxes. In this edition, we will explore the remaining sources of income that make up the remaining $50 million of the county’s budget.
Chatham County collects revenue in a variety of ways. In addition to property taxes, the county also receives income from fees and charges for services, transfers into its coffers from multiple sources, and sales tax.
Fees and services
Chatham County collects close to $1.9 million in fees, including beer and wine permits, concealed carry and pistol permits, Register of Deeds fees, and building permits and inspections. By far, the largest percentage of fee revenue—little more than $1.4 million—comes from the county’s building inspections. Chatham County staff perform building, electrical and plumbing inspections, not only for the county, but also for properties in each of the municipalities. Another significant chunk of fees collected—$375,000—is from the Register of Deeds which includes revenue collected for the sale of real estate and fees for items such as marriage licenses.
The county also receives over $2.4 million in revenue for “charges and services.” There are 39 different line items that make up this revenue category. Major contributions to this fund include other inspections and testing the county provides. For example, environmental health inspections and testing and erosion control fees alone bring in about half a million dollars. Other charges and services include rental, recreation, tax collection, and fire inspection fees.
The Chatham County budget is also fed from transfers into its coffers from a variety of sources. For example, the county gets nearly $10 million from other government agencies on the federal, state, and local level. According to Chatham County Manager Dan LaMontagne, the “vast majority” of those revenues are from federal funds which include Medicaid support, and from state funds.
Other transfers that are added to the budget derive from Chatham County’s own accounts. For example, funds from impact fees—close to $4 million—were added to the county’s general fund budget for the current fiscal year. The county also transferred a little over $12 million from its debt reserve fund, a sort of savings account to pay off debt, to its general fund.
The final major source of income to the county budget comes from sales tax to the tune of about $15.7 million. Sales taxes are taxes added by governing bodies for the purchase of certain goods and services. The state of North Carolina set a basic sales tax rate of 4.75% while permitting other jurisdictions the ability to increase that amount through ballot measures voted on by the jurisdiction. According to the North Carolina Department of Revenue, counties in North Carolina have overall sales tax rates between 6.75% and 7.50%. Prior to this year, Chatham County had one of the lowest sales tax rates in the state. However, Chatham County voters approved a referendum increasing the sales tax by a quarter of a penny on March 3, 2020 by a margin of 51.4% to 48.6%. Chatham County is now more in line with the rates of its neighboring counties at 7%, but still trails the rate in Durham, Orange and Wake. Funds from the new sales tales revenue are proposed to be used for Affordable Housing, Agriculture Preservation & Enhancement, Education and Parks and Recreation.
Revenues from sale taxes have been steadily increasing over the years as well as the revenues from real property taxes. For example, Chatham County projects to collect approximately $13,811,383 more from real property taxes in FY 2020/2021 than it did in FY 2017/2018.
This total of nearly $80 million dollars accounts for around 60.3% of the projected revenue for this fiscal year, while projected sales tax receipts account for approximately 11.9% of revenue.
Population growth in certain portions of the County have contributed to a lion’s share of the revenue growth over the past five years even as County policy makers wrestle with the vexing challenges of an imbalanced tax base and the chronic under collection of sales taxes due to distributions made at a state level to neighboring counties who have zip codes that overlap into Chatham County. (Sales tax revenues are distributed based on five digit zip codes, which is why efforts have been made to educate residents who live in North East Chatham for example to utilize nine digit zip codes when ordering goods and services online. Of course shopping aty locations with a Pittsboro zip code assures that all revenues will be distributed to Chatham County by the State.)
The County will be scheduling its budget work sessions in January with public input likely to be on the calendar in May of 2021.
The Chatham County Line will continue to run stories on the budget and the process throughout the year. If you have any questions or input please email us at firstname.lastname@example.org