Chowan County board drops proposed tax hike, trims COLA and backs school funding plan

The Chowan County Board of Commissioners on June 5 directed staff to proceed from County Manager Kevin Howard's recommended budget with no property tax increase, reduced a proposed 5% cost-of-living adjustment for county employees to 3%, and recommended funding Edenton Chowan Schools' tier-one request while asking the school system to use $100,000 of its fund balance.

Chair Bob Kirby said the Board would "start back from the Manager's recommended budget with no tax increase" and framed the options as choosing between raising the tax rate or drawing from fund balance. County Manager Kevin Howard told the Board the Manager's original budget included a $1.3 million fund-balance appropriation to balance FY2025-26 and that the wind-project tax revenue at the current rate would not fully fund the budget without using fund balance.

Finance Officer Cathy Smith said the county nets about $600,000 in wind-project tax revenue in the upcoming year after repaying the Economic Development Incentive Grant (EDIG), and that the EDIG payback amount remains in place for roughly six to seven years. Howard warned that "anything funded this year with fund balance is a deficit for next year's budget," urging caution about relying on one-time reserves for recurring costs.

A member of the public, Steve Karl, addressed the Board in opposition to any tax increase and urged commissioners not to raise taxes, citing an upcoming property revaluation next fiscal year. Kirby said that if property values rise next year the Board would try to reduce the tax rate to ease taxpayer burden.

On employee pay, the Board reviewed a Finance Office handout comparing the cost of a 2% versus a 5% COLA and, after discussion, recommended cutting the proposed 5% COLA to 3% for the next fiscal year. Howard also reminded the Board that it had recently approved a salary study to compare county pay with neighboring counties.

On schools, Howard reported prior work-session spreadsheets that had included a $340,000 tier-three teacher supplement request and an $836,000 tier-one request to maintain level funding. The Board recommended fully funding the tier-one request. The County's local current expense appropriation would increase $936,000 over the current fiscal year to cover the tier-one items while the Board recommended the school system contribute $100,000 from its fund balance; the tier-three supplement was not included in the recommended budget.

Howard reported $312,347 in recommended departmental cuts identified after meetings with department heads. He also said about 65% of the county budget is spent on Education and Public Safety and that the estimated fund-balance appropriation would be $1.4 million if there is no tax increase; the county's fund balance is estimated to be about 23% after changes made at the work session.

Other items noted: Howard said he is working with the Town Manager on a recommended fire budget and exploring a joint county-town fire inspector position for later consideration; the Board left water rates unchanged for now.

Commissioner Chris Evans moved to adjourn; Chair Kirby called the vote and the motion passed unanimously, 6-0. The special meeting was adjourned.