tax collection

Another big topic we discussed at our annual retreat is our budget strategy for the upcoming fiscal year. Revenue for the current fiscal year continues to be strong. As of the end of January, ad valorem property tax receipts are just over 100% of budget. Sales tax receipts through the end of December (half the fiscal year, which does not include the full impact of Christmas) are at 56.5% of budget. On the expense side, most line items are on track with our budget.

As a result of this, we are looking at a pretty healthy surplus when we close out the fiscal year at the end of June. Part of our strategy for the current fiscal year was to take a fairly conservative approach to the budget, and if the economy bounced back faster than anticipated, we would use some of the resulting surplus on outstanding capital projects.

So, staff presented four options for prioritization for the current year. Those were the Splash Pad, Skate Park, Dog Park, and the next phase of improvements to Rocky Branch Park. After some discussion, we decided to prioritize the Skate Park and the Rocky Branch Park improvements, which together will consume roughly $220k of this year’s surplus.

Looking ahead to next year, capital projects will likely continue to be a focus. Given how strong our revenues have been and continue to be, I suggested that we, as a Council, take a look at our property taxes to determine if we need to make any adjustments to the tax rate. The City has seen very positive growth in both our tax base and our sales tax collections over the last few years, so I think this may create an opportunity for us to implement a small cut to the tax rate while still accomplishing the goals that we have for the City. Prudence would suggest that whatever we do on that front should be measured, and the rest of the Council agreed to take a look at this at an upcoming workshop. So, we will take a look at this over the next few weeks as we get into building the budget for next year.

Belmont Tax Graph

Property Taxes in Belmont Among the Highest in Gaston County

Outside making zoning and development decisions, setting the property tax rate in Belmont is one of the city council’s most important jobs. And, if you’re like me, you just got your tax bill in the mail and may be experiencing a little sticker shock based on your new valuation that Gaston County completed this year.

How Your Tax is Calculated

If you are not familiar with how the actual tax you pay is calculated, here’s how you get to that number:

  1. Take the value of your property (as determined by the county appraisal) and divide by 100
  2. Multiply that number by the tax rate

Belmont’s tax rate is currently $0.515 per $100 of value. So, if your house was worth $100,000 than your tax is ($100,000/100) x $0.515 = $515.00

You actually pay both your county and city property taxes at the same time. The county’s current rate is $0.84 (which was just lowered from $0.87), but it’s calculated the same way, and you just add it to the city tax to get your total bill.

So, in our example above, the county portion is ($100,000/100) x $0.84 = $840.00. So our hypothetical Belmont homeowner has a total tax bill of $515 (City of Belmont) + $840 (County of Gaston) = $1355.00

There are actually two ways that your taxes can go up. The city can raise the actual tax rate (which they did last year, increasing it from $0.475 to $0.515), or the assessed value of your property can go up (which is likely what happened to most people this year). The revenue-neutral rate, which is the tax rate that Belmont would need to assess this year (after the re-evaluation) to collect the same amount of revenue as last year (before the re-evaluation) is $0.465. So, what has happened is that the tax rate went up last year, and then this year assessed property values went up (because of the county’s re-evaluation) even as the tax rate stayed the same.

How Does Belmont Compare to Other Towns/Cities?

The average tax bill paid by Belmont homeowners is actually the highest in Gaston County, but you wouldn’t necessarily see that if you just look at the city’s tax rate. I pulled together some data on the other municipalities in Gaston County to give you an idea of where Belmont stands relative to the rest of the county. If you just look at tax rates, you actually miss a big part of the picture. Here’s a simple ranking of where Belmont stands just based on tax rates (note that this excludes the county tax rate, which is the same across the entire county):

RankMunicipalityTax Rate
4Mount Holly0.485
7Bessemer City0.45
8Kings Mountain0.43
10High Shoals0.41

Looked at from a pure tax rate perspective, Belmont comes in at number three. However, when we adjust for the median home value in each of these municipalities and apply that to the tax rate, Belmont jumps to number one:

RankMunicipalityTax RateMedian Home ValueAvg City Tax BillAvg Total Tax Bill
2Mount Holly0.485$163,710$794$2169
11Bessemer City0.45$72,870$328$940
12Kings Mountain0.43$71,490$307$908
13High Shoals0.41$53,880$221$674

It’s also worth noting that because the median home value in Belmont is higher than in most other municipalities (except for McAdenville), the average county tax bill for Belmont homeowners is among the highest in the county (about $1424) – but that’s a topic for another day.

What Tax is the Right Tax?

If you look at historical tax rates in Belmont, the $0.475 rate was set all the way back in 2008, and obviously a lot happened between 2008 and 2018 (which is when the new rate was effective). Especially after a re-evaluation where property values change significantly, I think that the council should be willing to review the appropriateness of the tax rate to ensure that we are collecting what we actually need. In my mind, collecting too much tax money is just as bad as not collecting enough. We don’t want to end up with a situation where we don’t have enough funds to maintain facilities, fund capital improvements, etc. but we also don’t want to get into a situation where we’re looking for things to spend money on.

Given our standing relative to the rest of the county, I think it’s worth taking a look at the tax rate next year to see if it’s still appropriate (especially since there is a rather large budgeted surplus this year – though that is being directed to a rainy day fund). But what do you think? Do you feel like your taxes are too high? Are there some things that you’d like to see get more funding? Let me know in the comments!