Kannapolis budget would raise property tax rate by 7 cents ...

Kannapolis Looking at 7-cent Rate Increase (Added: May 31, 2012)

Kannapolis City Manager Mike Legg presented a proposed budget to City Council that includes a property tax rate of 56 cents per $100 valuation, up seven cents. Because of declining property values, th (more)

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KANNAPOLIS, N.C. ? The Kannapolis property tax rate would increase 7 cents and spending would rise nearly $3.3 million under the proposed budget presented to city council Thursday.

The proposal also calls for a $3.20 per month increase in the recycling fee, which would change to a ?solid waste fee.? That fee would be $6.85 and go to the newly created environmental fund, which would include solid waste disposal.

Kannapolis City Manager Mike Legg said the property tax rate of 56 cents per $100 valuation is revenue-neutral or generates the same amount of tax dollars as the previous rate of 49 cents did. The Cabarrus County property revaluation takes effect July 1, and overall values are down.

?The proposed property tax increase of 7 cents is not contributing to the revenue increases due to the corresponding reduction in property values in Cabarrus County this year and Rowan County last year,? Legg said.

On average, property values in Kannapolis are down 12.4 percent. Officials say this is first revaluation in the city?s history that resulted in overall values going down.

Councilman Gene McCombs said he would like to see a breakdown of valuations because he is concerned that lower-priced homes might not have lost as much value percentage-wise and could actually pay more taxes.

Finance director Eric Davis said he would try to get more data on residential properties before the next meeting.

Officials sampled a range of commercial properties. The N.C. Research Campus? values went down less than 1 percent, and its tax bill would go up $128,000, Davis said.

Shoe Show?s valuation went down 17 percent, and Afton Ridge shopping center went down 19 percent. Both will pay less in property taxes under the proposal, Davis said.

The increased spending comes from other sources, including increased collection rates, higher sales tax revenues and fee increases for storm water and recycling, Legg said.

Sales tax revenues were up in the 2011-2012 and are projected to increase for the 2012-2013 budget year by $755,000.

?This is one of the positive signs that the economy is improving,? Legg said.

City officials project growth in water and sewer charges as the economy improves. The estimated increase is $275,964.

Repayment of the N.C. Research Campus bonds accounts for $596,615. Cabarrus County pays Kannapolis that amount for the financing of the Cabarrus Health Alliance building, and the money ?passes through? the city?s budget.

Retiring and refunded debt accounts for another $650,000 in available revenue.

A 40-cent increase in the monthly storm water fee would generate $129,000 per year.

McCombs called the increase ?regressive? because it is a higher percentage increase for smaller homes and properties. ?For tier 2 the increase is 10 percent, but it is bigger for tier 1.?

Tier 1?s current fee is $3 per month and is for buildings with 1200 square feet or less, while the rate for tier 2 is $4 per month and for buildings between 1200 and 3200 square feet. The Tier 3 rate is $5 per month, and the commercial rate is $4 per unit per month.

Public works director Wilmer Melton estimated that 75 to 80 percent of properties in Kannapolis fall into Tier 2.

McCombs suggested using a 10 percent increase across the board, which would be 30 cents for Tier 1, 40 cents for Tier 2 and 50 cents for Tier 3.

A public hearing on the budget is set for June 11. The council has until June 30 to approve the new budget and tax rate.

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