Chapel Hill Town Council FY 2026-27 Budget Work Session - May 13, 2026

The Town Council held a work session on May 13, 2026, to review the FY 2026-27 Recommended Budget totaling $169.7 million, with no proposed increase in the property tax rate. The manager presented investments in employee compensation, affordable housing, climate action, and infrastructure, while council discussed fiscal sustainability, library funding challenges, and strategic priorities. The council also entered a closed session.

Discussion Items

• Budget Overview: Town Manager Ted Voorhees presented the $169.7 million budget, including $100 million general fund, with no property tax increase. Key investments include a 4% market pay increase, three new positions (library experience assistant, fleet technician, and economic development), and continued funding for affordable housing, climate action, and greenways. The five-year fiscal sustainability plan targets investments in facilities, streets, fleet, and fire capital.
• Library Funding: Library and Community Arts & Culture Director Atlas Logan discussed the potential reduction in Orange County's $620,000 contribution. Options to address the gap include charging out-of-area library card fees ($65/year), increasing service fees, reducing collection budgets, and laying off part-time staff (20-26 positions), which would reduce weekend and evening hours. Council members expressed strong opposition to the proposed cuts and emphasized advocacy with the county.
• Stormwater Fee Increase: The budget includes a 23% increase in the stormwater fund, with an $8.798 per equivalent residential unit (ERU) fee increase. For an average household (2 ERUs), the annual fee would rise from approximately $82 to $100.
• Employee Compensation and Positions: Council discussed the three new positions. The fleet technician position was broadly supported. The library position was discussed in context of potential county funding cuts, with some council members suggesting holding off on hiring. The economic development position (destination coordinator) sparked debate about the need for a clear strategy and ROI analysis before hiring.
• Revenue Estimates: Council questioned the methodology for sales tax projections, noting past discrepancies. Staff acknowledged the difficulty in forecasting, especially after the revaluation.
• Capital Planning: Council requested more information on unfunded capital needs and the five-year debt outlook, particularly for facilities like the police headquarters and parks administration.
• Communication and Engagement: Council emphasized the need for better public communication about budget trade-offs, service reductions, and the rationale behind financial decisions. Earlier community engagement was suggested.

Key Outcomes

• The council expressed general support for the recommended budget direction but requested additional information on the economic development position's strategic goals and ROI.
• The library funding contingency plan was discussed, with council preferring to advocate for continued county funding before implementing service cuts. Staff will proceed with the budget assuming county revenue continues and will deploy phased alternatives if needed.
• The council agreed to keep the June 3, 2027 work session as a potential additional meeting, releasing the May 27 session. The public hearing on the budget is scheduled for May 20, 2026.
• A motion to enter closed session under N.C. Gen. Stat. § 143-138.11(a)(5) was approved unanimously. The meeting adjourned at 9:57 p.m.