Title Adoption of the FY 2026-27 Annual Budget & Capital Improvement Plan (2027-2031)
PURPOSE: The purpose of this agenda item is for the Town Council to adopt the annual budget for the fiscal year 2026-27 and the Capital Improvement Plan (2027-2031).
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Department
DEPARTMENT: Town Manager Office & Finance
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Information
INFORMATION: The North Carolina Local Government Budget and Fiscal Control Act (LGBFCA) requires that the Town Manager submit a recommended budget and budget message to the Mayor and Council; that the Town Council hold a public hearing on the recommended budget; and that the Town Council adopt an annual budget ordinance each year by July 1. The budget must be balanced which is defined by LGBFCA as “the sum of estimated net revenues and appropriated fund balance in each fund shall be equal to appropriations in that fund.”
During the budget development process, several budget work sessions were held to review year-to-date revenue collections and expenditures, discuss the budget outlook, and provide an overview of the Capital Improvement Plan (CIP). On February 10, 2026, the Town Council held a budget work session during which the Town Manager and Deputy Finance Director/Budget Manager presented current-year financial updates, the FY2027 budget outlook, and the budget development process. On April 14, 2026, the Deputy Finance Director/Budget Manager presented an overview of the Capital Improvement Plan and proposed FY2027 capital funding. On May 12, 2026, the Deputy Finance Director/Budget Manager presented the Town Manager’s Recommended Budget for FY2026-27 and the five-year Capital Improvement Plan to the Town Council, totaling $44.6 million and $71.6 million, respectively.
The budget document was subsequently filed with the Town Clerk and made available for public inspection at Town Hall and on the Town’s website, with notice of its availability published in local media. A public hearing on the Town Manager’s Recommended Budget was held on May 19, 2026.
Key Budget Investments
• Tropical Storm Chantal recovery efforts
• Bolin Creek Phases 3 and 4 (Crossings Study)
• Development of an affordable housing strategy
• Updated townwide ADA policy and compliance strategy
• Completion of a new Unified Development Ordinance (UDO).
• Livable wage adjustment to the pay plan, a 2.5% cost-of-living adjustment for all employees, and actions to address significant increases in health insurance costs
The Town’s annual operating budget reflects Carrboro’s commitment to protecting the quality of life Town residents value while navigating a challenging economic environment. The recommended budget demonstrates the Town’s dedication to supporting the Town workforce, investing in critical infrastructure, and addressing the immediate needs of the community. The Town has developed a balanced budget which relies on revenue projections intended to be both prudent and sustainable.
The total budget for FY 2026-27 is as follows:
The General Fund serves as the Town’s primary operating fund. The FY 2026-27 budget continues to prioritize the Town’s core pillars of Race and Equity and Climate Action.
The Capital Project Funds support the construction, renovation, and improvement of the Town’s capital assets. The FY 2026-27 through FY 2030-31 CIP includes several new and ongoing projects focused on facility improvements, transportation infrastructure, parks and recreation enhancements, stormwater infrastructure, and greenway development. Major projects planned for FY 2027 include the Bolin Creek Phases 3 & 4 Crossing Study, Tropical Storm Chantal Recovery Vehicle Replacement, and the Barnes Street Sidewalk Project. Collectively, these projects represent approximately $5.6 million in planned capital investments for the fiscal year.
The Affordable Housing Fund, which is included in the Special Revenue Fund, provides a stable and dedicated revenue source for affordable housing activities. In FY 2027, a property tax rate of 1.5 cents will continue to be dedicated to affordable housing initiatives.
In addition to the annual budget ordinance, which includes the General Fund, Special Revenue Funds, Capital Project Funds, Stormwater Enterprise Fund, and Parking Enterprise Fund. The Town Council will also review and consider several related resolutions, including amendments to the position classification and pay plan, approval of the cost-of-living adjustment, and amendments to the miscellaneous fees and charges schedule.
Annual Budget Ordinance - Attachment A
The attached Annual Budget Ordinance includes General Fund appropriations totaling $36,237,328 by function for the operation of the Town beginning July 1, 2026. The ordinance also includes the estimated net revenues anticipated to be available during the fiscal year. In addition, the budget ordinance includes Special Revenue Funds, Capital Project Funds, the Stormwater Enterprise Fund, and the Parking Enterprise Fund, each of which contains budget summaries for estimated revenues and expenditures. Attachment A also includes the Fee Schedule and General Authorities.
The total estimated property tax valuation is $3.82 billion, as determined by the Orange County Tax Administrator. The Town’s property tax rate will remain at $0.5653 per $100 of assessed value, with $0.5503 allocated to the General Fund and $0.0150 allocated to the Affordable Housing Fund.
Position Classification and Pay Plan - Attachment B
The annual budget for FY 2026 includes changes to be incorporated into the position classification and pay plan. There are no requests for new positions or service enhancements.
There will be no merit or performance pay provided to Town employees in FY 2026.
Salary and Wage Adjustment Resolution - Attachment C
Effective July 1, 2026, all permanent full-time, permanent part-time, temporary part-time, appointed employees, and elected officials shall receive a 2.5% cost-of-living adjustment to base salary.
Amendment to Miscellaneous Fees and Charges Schedule - Attachment D
The resolution amends the Miscellaneous Fees and Charges Schedule beginning July 1, 2026.
FISCAL & STAFF IMPACT: The total FY 2026-27 general fund budget presented for adoption is $36,237,328. The grand total budget including all funds is $44,653,077.
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Recommendation
RECOMMENDATION: The Town Council is requested to adopt the following resolutions:
a. Annual Budget Ordinance for FY 2026-27
b. Resolution adopting Changes to Position Classification and Pay Plan.
c. Resolution Approving Salary and Wage Adjustments for Employees and Elected Officials.
d. Resolution approving amendments to the Miscellaneous Fees and Charges Schedule.
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