MOREHEAD CITY — City officials propose a 5-cent property tax increase for the upcoming fiscal year in order to fund major capital improvement projects planned over the next several years.

City Manager Ryan Eggleston presented this recommendation, along with the proposed fiscal year 2019-20 budget, during a workshop with the city council at the municipal building Tuesday. If adopted, the proposed 5-cent increase will bring the citywide ad valorem property tax rate to 40 cents per $100 of assessed value.

To best leverage the increased tax revenue, Mr. Eggleston also proposed freezing most capital improvement projects for fiscal year 2019-20 and developing a five-year capital improvement plan for the city. The CIP program would take effect in fiscal year 2020-21.

“How do we focus in on building a mechanism for, in particular, our large, significant capital projects that we have to do on an annual basis; how do fund that on an ongoing basis?” Mr. Eggleston asked the council Tuesday.

He said most non-essential departmental capital requests will be “put on pause” while staff works to create the five-year CIP next fiscal year. Major capital projects the council has identified for the next few years include the new city hall building, new fire station and a stormwater management plan.

“When we come to you all in the spring of 2020, we’ll really have a clear picture of what our capital means are,” he said. “…The question is how might you be able to create a revenue stream that’s able to fund those capital initiatives.”

The proposed 5-cent rate increase, which must be approved by city council, is the first tax increase levied on Morehead City residents since a 2-cent increase in 2015. Mr. Eggleston noted Morehead City’s property tax rate was 40 cents in 1999, but it dropped drastically in the Great Recession. Since then, the tax rate has steadily risen to reach pre-recession levels.

“Certainly, the town is to be commended that from 1999 to 2018, you’ll notice we’re at a slightly smaller cent tax rate, at 35 cents (compared to) 40 cents in 1999,” Mr. Eggleston said.

An average home or business in Morehead City valued around $200,000 will have to pay about $100 extra per year under the proposed rate increase. For smaller homes or businesses, that figure could be as low as $30, while more expensive properties could pay $300 or more per year in additional taxes.

In addition to the property tax rate increase, the 2019-20 budget proposes a 3% increase in water and sewage fees and an increase of $5 per month for garbage collection. Mr. Eggleston noted garbage fees have not been raised since July 2012.

He said Morehead City is a “full-service community” that provides its residents everything from water and sewer access, to police and emergency service, to recreation opportunities. He said those services represent a great value for residents, but they can’t continue to be funded at the same level indefinitely.

“We’ve been able to hold the line for a good while, but we’re at the point now where an increase is necessary and recommended,” Mr. Eggleston said.

The 2019-20 proposed budget totals $25,326,632, a 12% decrease from the current fiscal year.

The decrease can be attributed, in part, to the consolidation of the fire and EMS fund with the general fund, which eliminates transfers between the funds. According to the draft budget, the general fund, which now incorporates the fire & EMS department, is $15,769,703; water and sewer is $8,532,129; and sanitation is $1,024,800.

Although the proposed budget does not honor many departmental capital requests, some capital outlay projects are included. Among the funded projects are Katherine Davis Park development, phase one of a stormwater management plan, construction of the new city hall and website and other communication upgrades.

In addition, under the proposed budget, the city will provide a $170,000 local match for a $600,000 dredging and shoreline stabilization project around Sugarloaf Island and a $300,000 dollar-for-dollar match for a Shevans Park renovation. The city will also purchase a new street sweeper for $158,600 to bring beautification services in-house.

The city will hold another budget workshop later this month. A public hearing on the proposed budget, which is required before it can be adopted, will be held at the June city council regular meeting. The new budget takes effect beginning Monday, July 1.

Contact Elise Clouser at; by phone at 252-726-7081 ext. 229; or follow on Twitter @eliseccnt.


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