FY2021 Budget

GENERAL FUND OVERVIEW

Ad Valorem Taxes (Property Tax/Auto Decal Fee) The property tax rate is the only revenue in full control of Town Council. The FY 2021 property tax rate is recommended to decrease by $0.025 from the current rate of $0.39 to $0.365 per $100 of property valuation. 9 The $0.025 decrease reflects an adjustment closer to the revenue neutral tax rate (RNTR) following revaluation of property values in 2019. Fully adjusting to the RNTR does not provide adequate resources to retain historical and desirable recurring budget appropriations for town programs and services. The calculated MSD RNTR is approximately $0.082 based on the revaluation of property within the service district. The tax rate is proposed to remain at $0.10 to complete the final neighborhood project and pay down the conversation cost. The RNTR is defined as the rate that is estimated to produce revenue for the next fiscal year equal to the revenue that would have been produced for the next fiscal year by the current tax rate if no revaluation had occurred. The calculation of RNTR takes into consideration more than real property and is the average annual tax base growth since the last revaluation as well as adjustments for annexations, de-annexations, mergers and other material events that may otherwise skew the results. A summary of the RNTR tax rate analysis is provided below:

Revenue Neutral Tax Rate Based on 3.36% Average Growth Rate

Assessed Valuation (as noted in CAFR) % Change Average Growth Rate over 4-Year Period Fiscal Year

Year Prior to Revaluation

Assessed Valuation

Tax Rate

Estimated Levy @ Current Rate

2020-21 $6,200,175,000 2019-20 $5,003,045,438 2018-19 $4,844,680,828 2017-18 $4,587,660,798 2016-17 $4,532,717,369

3.27% 5.60% 1.21%

2019-20

$5,003,045,438

0.390 $ 19,511,877

Assessed Valuation Estimate

Tax Rate @ Equivalent Levy

First Year of Revaluation

Average Growth Rate 3.36%

2020-21

$6,200,175,000

0.315 $ 19,511,877

RNTR @ 3.36% Average Growth Rate

Estimated Levy @ RNTR

The Town is not required to adjust the tax rate to RNTR. Adoption of the RNTR also does not suggest that a

0.325 $ 20,167,698

property owner will not see an adjustment to their annual tax bill, which considers both the change in the tax rate and the individual change in property tax value. In addition, the RNTR reflects only the Town of Morrisville portion of the property tax rate, excluding the Wake or Durham County component of the overall tax rate. When property values increase, additional revenue capacity is generated to support programs and services for a municipality. The Town has been fortunate to benefit from continued growth over the past four-year cycle and a relatively stable overall assessed property value. As a result, we have been able to effectively meet identified budget priorities until this year substantially from natural revenue growth allowing the Town to

9 Town Council changed the proposed tax rate from 36.5 cents to 36 cents at adoption.

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