FAYETTEVILLE, N.C. (WTVD) -- The City of Fayetteville is seeing a major breakthrough in closing a projected budget gap of about $8 million in the upcoming year.
The gap is a result of a change slated for how Cumberland County will collect taxes. The city said it has adopted a budget for 2024; its plan to close that shortfall is designed to have minimal impact on taxpayers.
The City said it has managed to avoid layoffs or diminishing city services. Instead, it is leaning on tactics such as increasing vehicle license fees by $20, projecting about $1 million in extra income from investments and reallocating its American Rescue Plan funds.
Property taxes will still only increase by 4 cents. That's a step that voters already agreed to in last year's midterm election.
"It was a difficult balance, but we know that this is a very tumultuous time for the people in our community, you know with the interest rates and inflation at a high," said Mayor Mitch Colvin. "This was the wrong time to add an additional tax burden. So we wanted to make sure that we continue to keep the city an attractive place for people to live, to prosper, and at the same time, be fiscally responsible."
City officials had to balance the budget by June 30 after entering an agreement in March with Cumberland County to change how taxes are collected.
The Cumberland County Board of Commissioners has yet to vote on the agreement, but in the document, it says the county intends to switch from collecting taxes based on an area's population size to instead collect them based on the area's property values starting in 2026.
The city of Fayetteville, alongside eight other municipalities, also agreed to give any extra funds it received in economic growth to the county in the meantime. That's led to the shortfalls that Fayetteville officials are expecting in 2024 as well as a $9 million shortfall in 2025.
The mayor acknowledged that keeping a balanced budget will continue to be a challenge once the tax change goes into effect, but the city is exploring its options for solutions.
"I am confident that we've had a lot of organic growth," Colvin said. "I think some of the trends we've been seeing in a positive wave that businesses are investing here, people are spending money here will definitely help that. But we're working with our state delegation and others in our community to hopefully to petition the state to make a bit more of an equitable distribution in some of the other tax categories."