With residents pushing back against a tax increase, here's where Leland gets its money

Crafting a budget for the 2024-25 budget has been a battle for leaders in Leland this spring, with residents pushing back against an originally proposed tax hike, seemingly unwilling to compromise with town officials.

When town staff originally proposed the draft budget for the 2024-25 fiscal year, which begins in June, it included a 16-cent increase to the town’s property tax rate – bringing the rate up 70% from 23 cents per $100 in valuation to 39 cents. Residents showed up by the hundreds to voice their opposition to such a hike.

Town staff argued the increase was necessary to fund various infrastructure projects in the rapidly growing town. The 2023-24 budget totaled $42.8 million, which was increased in the originally proposed 2024-25 budget by 30% to $56 million, with property taxes making up the biggest revenue source for the town.

The Leland Town Council directed town staff to draft a new budget, this one keeping the property tax rate below 30 cents. Town Manager David Hollis presented a new draft budget in April, this one with a 4-cent increase to the property tax rate, a 17% increase to 27 cents.

The originally proposed draft budget totaled $56 million, with $52 million making up the general fund balance. Accounting for the lower property tax revenue at just a 4-cent increase, the newly proposed budget totaled $50 million, with the general fund coming in at $46 million.

The major sources of municipal revenues are property taxes and sales tax, according to the North Carolina League of Municipalities, a member-driven organization that represents the interests of the state’s municipalities. Municipalities can also receive funding through various state and federal grants, which largely fund or help support specific projects.

Here’s how Leland’s revenues break down

Even with the smaller increase to the property tax rate, property taxes remain the largest stream of revenue for the town of Leland.

At the originally proposed 39-cent tax rate, the town would have generated $25.9 million in property taxes, making up nearly 50% of the town's anticipated revenues. At the 27-cent rate, the town estimates generating roughly $18.1 million in property tax revenue, making up 39.5% of the town's revenues.

The town’s continues growth and development has led to an increase in the property taxes the town has collected over the last five fiscal years. In the 2019-20 fiscal year, the town’s real property tax rate revenue was roughly $6.1 million. The property tax rate that year was 21 cents, which remained in the 2020-21 fiscal year, keeping the property tax revenue relatively consistent at $6.4 million.

The town raised the property tax rate to 25 cents in the next fiscal year, generating some $8.4 million in revenue. The rate stayed the same for the 2022-23 fiscal year, generating $9 million in revenue.

In the current 2023-24 fiscal year, Leland lowered the property tax rate to 23 cents, but it was a revaluation year, so the lower rate still generated millions more in taxes when properties were revaluated to reflect their current value. The town expects $13.5 million in property tax revenue this year.

Raising the tax rate to 27 cents for the upcoming fiscal year, the town estimates it would generate $17.1 million in property tax revenue – a 180% increase from the $6.1 million generated in the 2019-20 fiscal year.

Sales and use tax makes up the next-biggest slice of the town’s revenue pie, at an estimated $13.4 million or 29% of revenue.

The sales tax revenue the town has seen has steadily grown over the years, which Hollis attributed both to the growth of the economy and the growth in population of the town.

In the 2019-20 fiscal year, the town saw $5.8 million in sales tax revenue, which has increased steadily by roughly $1.3-1.8 million each following fiscal year. The town estimates $13.4 million in sales tax revenue in the upcoming fiscal year.

Sales taxes are collected by businesses, submitted to the North Carolina Department of Revenue, which distributes those funds back to the counties, Hollis said. The county then distributes funds to the individual municipalities, not based on what areas saw the most sales, but based on population.

“With the growth of the economy, the pie gets bigger,” he said. “And with growth in population, the town’s slice of the pie gets bigger.”

Hollis said Leland sees about 12% of the county’s sales tax “pie.”

Fire fees makes up another 13.4% of the town’s revenue at $6.1 million. Property tax, sales tax and fire fees total around $37.7 million in anticipated revenue for the town, with the rest of the $46 million budget coming from various, smaller revenue streams that together total some $8.2 million.

According to the North Carolina League of Municipalities, there are 552 incorporated municipalities and 100 counties in the state. These municipalities are established to provide residents in an area with government and urban services like water, sewer, police, streets, transportation, recreation and more. The governing bodies in those municipalities adopt the annual budget, setting the property tax rate for the year.

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Leland Town Council is set to hold a budget public hearing on May 2 at 6 p.m. at Leland Town Hall.

Jamey Cross covers Brunswick County for the StarNews. Reach her at jbcross@gannett.com or message her on Twitter/X @jameybcross.

This article originally appeared on Wilmington StarNews: With residents pushing back against a tax increase, here's where Leland gets its money