Title Adoption of the FY 2025-26 Annual Budget
PURPOSE: The purpose of this agenda item is for the Town Council to adopt the annual budget for the fiscal year 2025-26.
end
Department
DEPARTMENT: Town Manager & Finance
end
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.”
On April 8, 2025, the Town Council held a budget work session where the Town Manager and Chief Financial Officer presented and received input on the recommended budget for FY 2025-26. On May 6, 2025, the Chief Financial Officer presented to the Town Council a recommended budget for FY 2025-26 totaling $62.5 million, and the budget book was filed with the Town Clerk. It is available on the Town’s website and at Town Hall for public inspection. The notice of its availability was published in the local media. On May 20, 2025, a public hearing was held on the Manager’s Recommended Budget.
The goals for the FY 2026 budget are to include:
• Implement the Town Council’s priorities
• Investment in the retention of current town staff.
• Develop a balanced budget
• Manage costs while improving services for residents
• Conceptualize a long-term financial sustainability plan for the Town
The Town’s annual operating budget represents Carrboro’s mission and commitment to enhancing the quality of life of our residents. This budget reflects our dedication to supporting our valuable employees, investing in critical infrastructure, and meeting the immediate needs of our community. We have produced, as best we can, a balanced budget based on revenue projections that are not overly aggressive, nor unduly regressive.
The total budget for FY 2025-26 is as follows:
The General Fund serves as the Town’s primary operating fund. The FY 2025-26 budget continues to prioritize race and equity, climate action, affordable housing, downtown beautification, and capital projects.
The Capital Projects Fund includes construction, renovations, or other improvements to the Town’s capital assets. Major projects include the downtown area plan, UDO rewrite, South Greensboro Street Sidewalk, and Town Hall renovation.
The Affordable Housing Fund in the Special Revenue Fund provides a steady and reliable revenue source for affordable housing activities. A property tax rate of 2 cents will continue to be dedicated to affordable housing in FY 2026.
Along with the annual budget ordinance, the Town Council will need to adopt several other resolutions. These includes the following: position classification and pay plan, across-the-board salary adjustment, and miscellaneous fees and charges schedule.
Annual Budget Ordinance - Attachment A
The attached Annual Budget Ordinance includes General Fund appropriation of $36,667,133 by function for operation of the Town beginning July 1, 2025. The annual budget ordinance also includes the estimated net revenues that are expected to be available during the fiscal year.
As a result of the 2025 revaluation, properties within the Town of Carrboro are projected to experience a total value increase of more than 47% over the next four years. Due to this significant rise in assessed values, the Town of Carrboro's revenue-neutral tax rate is estimated to be $0.4681, which represents a reduction from the adopted FY25 property tax rate of $0.6044. A revenue-neutral property tax rate is the rate that would generate the same total amount of property tax revenue after a county-wide property revaluation as it did before, excluding revenue from new construction. When property values increase due to revaluation, the revenue-neutral rate is usually lower than the previous rate. This adjustment helps ensure that local governments do not automatically collect more money simply because property values have gone up.
The total estimated property tax revaluation is $3,891,956,235, as determined by the Orange County Tax Administrator. The annual budget includes an increase of 0.0972 cents above the revenue-neutral rate to balance the base budget and allocate half a cent for Affordable Housing initiatives, resulting in a General Fund tax rate of $0.5653 per $100 of assessed valuation.
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, 2025, a 5% across-the-board salary increase will be added to base salary for all current full-time permanent and appointed employees; all permanent part-time employees shall receive a pro-rated, across-the-board salary increase of 5% based on their position’s full-time equivalency effective July 1, 2025; All Town elected officials shall receive an across-the-board salary increase of 5% effective July 1, 2025.
Amendment to Miscellaneous Fees and Charges Schedule - Attachment D
The resolution amends the Miscellaneous Fees and Charges Schedule beginning July 1, 2025.
FISCAL & STAFF IMPACT: The total FY 2025-26 general fund budget presented for adoption is $36,667,133. The grand total budget including all funds is $62,539,852.
end
Recommendation
RECOMMENDATION: The Town Council is requested to adopt the following resolutions:
A. Annual Budget Ordinance for FY 2025-26
B. Resolution adopting Changes to Position Classification and Pay Plan.
C. Resolution approving the minimum salary and hourly rates for employees;
D. Resolution approving amendments to the Miscellaneous Fees and Charges Schedule.
end