Harnett County's Budget Crisis

Harnett’s Budget Dilemma:

Everyone hopes for a local budget that responsibly balances the critical needs of the county with the available revenue. As Harnett County continues to grow rapidly, the budget streams have not expanded to keep pace with the growth. The county leadership must advocate for a more diversified tax base in order to build a better future.

Following the last property revaluation, the value of most homes in the county increased to reflect their current market values. In an effort to keep our overall property tax burden low, the Commissioners lowered the tax rate from 75¢ to 59¢ per $100 of property value.

Unfortunately, the increased property values raised the wealth status of the county, which triggered the NC Department of Public Instruction (NCDPI) to withhold $5.8M from the Harnett public schools that would have been received if Harnett had remained a low wealth county.

On top of this, the commissioners responded to the Board of Education’s request for an increase of $9.7M in the FY 2024-2025 school budget by proposing $2.5M.

Combined, these two shortfalls have resulted in a funding deficit of $12M. Now the commissioners are faced with tough budget decisions.

Harnett has had no significant commercial sector, resulting in a limited commercial tax base. The only viable sources of revenue are sales tax and property tax. The commissioners are also considering taking funds from the county’s “rainy day” fund of approximately $25M that was established for emergencies and to bolster the county’s bond rating.

Budget Options And Consequences:

As presented by the county’s Director of Finance, Ms. Kimberly Honeycutt, the county has three options: 1) raise the tax rate; 2) draw down the “rainy day” fund; 3) use a combination of options 1 and 2 to lessen the negative impacts of options 1 and 2.

The impact of raising property taxes on owners is obvious; however, the county will continue to lose its low-wealth status each year if the county does not match the county’s tax rate to its wealth status. If the “rainy day fund” is tapped, then the county risks weakening its bond rating, thus making the cost of borrowing money higher. If the rainy day fund is tapped repeatedly to cover the deficit, then eventually the fund will be depleted. Clearly, neither option 1 or 2 alone is inherently attractive.

Finalizing The 2024-25 Budget:

There are only two scheduled meetings remaining before the budget will be finalized. The next Board Meeting is Monday June 17 at 6:00pm followed by a special meeting scheduled on Tuesday June 25 at 9am. Both meetings are at the Resource Building located at 455 McKinney Pkwy, Lillington, NC 27546. Both meetings are open to the public. I hope to see you there.